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Dec 31
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lower corporate tax

From Retro To Lower Corporate Tax To Bad Bank – How India is Turning Around Its Corporate Story

By Corporate Law No Comments

Lower Corporate Tax To Bad Banks in India

The world was presented with an unprecedented situation last year which had havocked great health crisis on nations.

But what made one country stand out from the other was its government’s strategic plan to contain the same and to turn its adverse situation into an opportunity.

It is to be noted that India was one of the nations that took quite appreciable steps to ramp its prospects in the international community.

It is no news that a long-drawn arduous battle of the government with foreign entities was ended when the retrospective tax was taken down.

Thus, it can be stated that a large breather was provided for consistent FDIs as the retrospective tax was withdrawn.

This led to more certainty about taxation rules in India and emphatically led to more business certainty in the economy.

Thus, the scrapping of retrospective law laid a robust foundation for clearer taxation policies in India.

The USA bears testimony to the fact that government intervention is crucial during a time of crisis.

This is mainly due to the fact that in the wake of the financially crippling meltdown in 2008, the United States too had embraced various emergency legislation to keep its economy afloat.

In fact, various schemes were enacted on large scale to effectively bail out private banks and institutions that were rotting away in the economy.

Along the same lines, the Indian government is implementing schemes with resolution and conviction. Given the numerous steps that have been taken during the last month, one can state that India ramped up FDI in its economy.

This can be stated as in addition to the abolition of the retrospective law which provided much-needed clarity, efforts were also made to move up a notch on the crucial scale of ease of doing business.

corporate rates With the lower corporate rates plummeting from a significant 20 percent to 22 percent, India opened its gate for various industries that had long dreamt of pursuing their dream in India.

In fact, if the reports are to be scrutinized, for some manufacturing firms the corporate rates were even reduced to a significant 15 percent.

In addition to lower corporate taxation, which made India a fertile ground for investments, various promotions in terms of the PLI scheme were also rewarded.

This was done to ramp up production and provide impetus in the corporations or sectors that had potential in the economy. It is to be noted that a corporation can either pull together a nation or pull it apart.

Thus, with investment in the corporate sector, the government altered its faltering prospects.

The need

This gives rise to a pertinent question what was the need for the attitudinal change or the need to make India an investment hub? Partly, a pandemic can be attributed to the success and implementation of the policy.

Various corporations and companies moving out of China due to the US-China trade war and high tariffs.

Thus, taking the advantage of geopolitics, India tried to renew its appeal to such firms with its aforementioned schemes.

Recently, newer strategies to revamp the banking or the financial sectors were also implemented. This was seen during the establishment of the bad bank in the economy.

With the establishment of the NARCL, the government aims to rectify its bad loan crisis in India and to clean the accounting books of the banking sector.

corporate sector Thus, call it immense conviction or perfect strategy, but it cannot be denied that the government has shown efficiency in the revamping of the corporate sector through the right timing and policies.

What presents the government’s brownie points is the fact that such reforms had been discussed earlier and time and again in the past but were implemented by the government in the most adverse of the times.

Talking about the corporate sector, it would be hard to not mention the telecom sector in India. It is no news that the telecom sector has been news much recently.

This was due to the AGR rules that had exacerbated the woes of the sector, especially of Vodafone which was on the verge of bankruptcy.

With the implementation of the telecom relief package, the government emphatically preserved consumers’ interest. This is due to the fact that India has three major telecom giants in its economy.

These include Jio, Airtel, and Vodafone. With the disintegration of the latter, there was a high possibility of the emergence of Duopoly.

This could have not fared well for the consumers. Also taking into consideration that the government cannot allow a giant like Vodafone to disintegrate, such a relief package was designed.

Given the decisive steps that are being taken by the government, it can be stated that the current government is definitely also winning its political capital for its conviction for change.

Also many might argue that the recent amendments in laws and initiatives are being taken to not only emphatically promote ease of doing business in the economy but also to soften the blow of the pandemic.

corporate
Thus, with a slew of newer initiatives, can such growth be sustained? The answer would definitely depend on the continuation of such sagacious schemes and initiatives. But will it be so? Only the future will tell us.

 

Tags: corporate rates, corporate sector, bad bank, corporate tax rate, company tax rate, global minimum corporate tax, bad loans, corporate taxation rate, bad loan bank

Dec 31
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crypto users

Fear, Uncertainty, Doubt: The FUD Reality of Crypto Users

By Economy, Others No Comments

The FUD Reality of Crypto Users

The Indian government has got the Indian crypto users or crypto traders anxious again due to its antagonistic stance against the contentious digital currency. The recent crypto regulation law has sent many traders desperately trying to sell a part, if not all, of their cryptocurrency portfolio, but, quite detestably, the trades wouldn’t go through. In a turn of recent events, the panic sell-off amongst crypto investors, which had recently warmed up to the technology, was triggered after it was announced that a crypto bill would be introduced in Parliament’s winter session.

What came across as concerning was the fact that the bill mentioned that trading of all private cryptocurrencies would be prohibited.

Given the speculative nature of the market, confirmation of such a humungous step was quite enough to send the market in frenzy. This led to plunging values in the crypto market with the prices fluctuating frequently. This has in fact been proven quite detrimental for the investors who were trying to sell or buy the stock.

With higher transaction values, the complaints about MobiKwik and the Wazir X app crashing were registered as well.

indian crypto tradersA hasty, uninformed decision?

Given the present circumstances prevailing in the crypto market, where does this make the crypto users stand? It is to be noted that the thousands of panic-stricken small investors have been left staring at their screens, being made to face the ordeal by the authorities.

This has led to venting out of frustration by the users on Twitter- which can appropriately be described as the fear, and uncertainty that can be seen among the investors in the market.

But given the uncertainty and mayhem that is at play in the crypto market, can the government be accused of an uninformed, hasty decision? Certainly not. One can perhaps argue, that the market was quite well versed with the government’s antagonistic and aversive attitude towards the contentious distal asset.

With various warnings of a ban, or curtailment, the latest bill shouldn’t come as a surprise for the users who might have been keeping tabs on the news in the market.

But has sagacious investing been a prominent choice for the investors? given the market conditions, one can emphatically argue that the humungous sell-off that happened earlier in the week across one of the biggest Indian crypto exchanges shows the exuberance and irrationality had always pervaded the better judgment of the investors in the market.

What is adding to the mayhem, is the fact that the exchanges keep on crashing, which happens to be becoming a pattern now. According to the reports, when the transactions are high, the exchanges usually crash. This effectively doesn’t let the trades go through.

cryptocurrency portfolioBut has there been a precedent that has been set for such a situation? The answer is affirmative. Similar problems were encountered earlier too when China’s central bank had effectively announced that all transactions involving cryptocurrencies were illegal.

This gives rise to a pertinent question, what exactly should be a preferred course of action under these circumstances? It is to be noted that a few smart investors have already started derisking themselves. This involves trading on various platforms to avoid a glitch.

According to the reports, the people and the traders have been demanding penalization of such exchanges which are working ineffectively. But why is such a glitch leading to such anguish amongst the investors if it merely represents delays in transactions? This is due to the fact that delays are leading the traders to fail in closing the trades.

This brings to the table the proposition that the trades and the platforms should be thoroughly be regulated like equities so that small investors don’t lose much money in the panic and anguish. This proposition has been brought to the table due to the mere fact that Sebi usually launches a probe if people lose money in equities due to a website’s glitches.

To top it all the need of the hour is the government’s intervention and assurance that needs to be provided to the panicking investors. with assurances that time will be given for withdrawal and closing of accounts, not leading to needless losses, such a panic state can be effectively crippled.

This is all the more needed, given the fact that there is already limited information that is coming from exchanges and the market is rife with unfounded rumors. In order to prevent slow down trading to prevent sell-offs, assurances by the government can help save the day.

crypto investorsWhat also needs to be considered is the fact that most of the investors on the exchange platforms are young and from smaller towns in India. Thus, they have limited financial knowledge of the asset class. Thus given the constricted knowledge horizons, one can effectively state that they tend to panic more, especially when there is such adverse news.

Thus, assurances and moderate actions are the need of the hour. now, whether the government takes that into consideration or not, is something only time will tell, but any further investments into the contentious digital asset will largely not be a sagacious idea.

Tags: Indian crypto traders, cryptocurrency portfolio, crypto investors, crypto bill, private cryptocurrencies, crypto regulation, crypto laws, crypto traders in India, crypto users, crypto market regulation, crypto exchange regulation

Dec 31
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committee of creditors

Effect of Committee of Creditors Approval in Corporate Insolvency

By Banking No Comments

Committee of Creditors Approval in Corporate Insolvency

Insolvency and Bankruptcy Code which came into effect in the financial year 2016, has been the most effective code for the insolvency proceedings in India.

One can even state that the invention of the code has been revolutionary for the banking sector, given, the state of haphazard the industry finds itself.

It can also be maintained that with the advent of the code, the industry saw the demise of the laws for liquidation and insolvency in the Indian bankruptcy regime.

But given that even the IBC brings to the table the option for liquidation, how exactly is the code different from the prior process of liquidation? It is to be noted that the crux of the code encapsulates effective objectives like maximizing the value of assets of a corporate which were barely recoverable under the arcane laws and emphatically easing the businesses by effectively minimizing the financial risk in business.

Thus, it can be effectively stated that the code significantly improves the condition of the financially distressed company by recovering its value through its effective time-bound manner of work.

Even though the IBC helps in the recovery of payments from the defaulter, its main focus is on the relief of the creditors of the company.

It is worth mentioning here that under the Corporate Insolvency Resolution Process, the creditors have placed ion the pinnacle of utmost importance.

Thus, given its newfound, enhanced role, the committee of creditors has been emphatically seen as playing a major role in the regime of insolvency. In fact, If the procedure is to be believed, the committee of creditors wields the utmost power and is effectively considered the supreme decision-making body in the Corporate Insolvency Resolution Process.

Thus, one cannot help but note here that the effective decisions by the committee will affect the resolution of the insolvency of the corporate debtor.

corporate debtorUnder particular regulation 21 of the code, the committee of creditors finds the seed of its formation. According to the code, the committee of creditors shall emphatically and strategically comprise all the financial creditors of the corporate debtor.

To remove the barrier and the arbitrariness of distinction, the code also effectively makes a clear distinction between the financial creditors and the operational creditors.

If a financial creditor is to be solemnly described, it effectively means anyone to whom the debt along with interest is owed. On the other hand, an operational creditor is one who has debts related to the supply of services and goods.

The power-wielding committee of creditors

As aforementioned, the committee of creditors is described as the supreme decision-making body. Thus, all the major or humungous decisions about the company are effectively taken with the approval of the committee.

Therefore, one can state that the committee of creditors has a humungous authority to affect the insolvency process.

This is also due to the fact that the committee can call the shots on sensitive topics like whether or not to restore the corporate debtor by strategically accepting any resolution plan.

In fact, it is worth mentioning here that the committee of creditors has the supreme power of approving the proposed resolution plan.

This strongly indicates the fact that the committee has an undue influence on the insolvency process, which will be tackled by its whims and decisions, thus, deciding the fate and the regular functioning of the corporate debtor.

bankruptcy code 2016In fact, it is also worth mentioning here that the committee of creditors also enjoys the authority to approach the adjudicating authority.

This can be done in the case of any foul play event that can be detected by the committee. This emphasizes the fact that the conditions of foul play and what determines it will be emphatically be decided by the committee, which surely puts humungous, undue power in the hands of the committee to sway the decision-making in the insolvency process.

The authority can also be effectively evaluated from the fact that the co9mmitee can also choose to proceed with the liquidation of the corporate debtor by not approving any resolution plan.

Thus, in a gist, it can be stated that the insolvency process depends heavily on the commercial wisdom of the committee while taking any decision for the corporate debtor.

This is because it is staunchly believed that the committee of creditors has better knowledge to mediate and analyze the debilitated situation of the company.

Thus, one can effectively argue that the committed creditors have been vested with immense powers under the insolvency and bankruptcy code 2016. With immense power bestowed on one committee, it can be stated that effects on the resolution of a company under distress can be immense and humungous.

With even a little whimsical attitude, one can conjure that it will have a negative impact on the

liquidation committee

financial health of the company that will nonetheless affect the process of insolvency in due course.

But on the other hand, one can also maintain that if the creditors can take absolute control of the

management of the corporate debtor, important decisions and the resolutions plan can be passed in a timely, swift manner which can help recover a larger value of the assets and will thus ease the financial risk in a company.

Thus, if the power is to be used sagaciously and prudently, one can expect such creditor-in-control model management to usher the banking sector into a stronger bankruptcy regime in India.

 

Tags: corporate debtor, insolvency proceedings in India, company insolvency, committee of creditors, insolvency resolution process, bankruptcy code 2016, liquidation committee, insolvency liquidation, liquidation act, insolvency and liquidation, corporate insolvency resolution process

Dec 31
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data privacy laws

Data Privacy Laws

By Others No Comments

Data Privacy Laws in India

One crucial and prerequisite demand of data privacy laws is that it needs to strike a balance between the legal framework for data protection that it proposes and the ability to effectively protect the privacy of the individuals while emphatically ensuring innovation.

What pertinent question the recent privacy laws of India give rise to is that is the recently proposed data protection legislation in India effectively strikes their balance?

data protection actLast year, the Indian government passed the Personal Data Protection Bill. This had provided for the establishment of the first cross-sectoral legal framework for effective data protection in India which until now was emphatically missing.

However, according to various experts, India’s introduction of privacy laws does not address the privacy-related harms in the economy like India which is data sensitive and is going through a digitalization stage.

Instead, of addressing the privacy framework or the vertical, we can scrutinize whether the bill proposes a robust preventive framework.

This effectively in many ways oversupplies the government with the immense power to intervene and strengthen its authority which cannot be too beneficial for the economy or the social structure of India.

One direct consequence of the diabolical aspect is that it can lead to an immense increase in compliance costs. Such costs will have to be borne by the businesses across various sectors of the economy.

Other than the business consequence of the laws, it is to be noted that effective protection of the privacy of an individual is highly necessary as privacy necessarily serves as a means to protect various personal facets like free speech and sexual autonomy.

Given the rise of homophobia and specially caste-based violence in India, it is quite imperative that such rights are protected at all costs. Thus, it can be rightly stated that a robust framework for protecting personal data is the need of the hour which is a contentious subject that lies untouched by the government.

The privacy framework needs to be designed along with a more precise understanding of the role of privacy in the whole society.

data protection lawWhat makes the laws even more contentious is the fact that the proposed diabolical framework is not only quite unlikely to protect the privacy of individuals adequately but also emphatically strengthens the role of the state in the data economy.

Given that the process of digitalization is underway in India, the placement of immense power in the hands of the state can prove to be quite diabolical.

On the other hand, more problematic is the consequence of diluting the property rights in data due to an emphatic rise in the state’s power to surveil. This can quite detrimentally lead to deleterious consequences for innovation in the economy which is the prerequisite demand for growth and newer technologies.

But why were these privacy laws needed in the first place? It is to be noted that the recent privacy laws are in, line with the larger context of India’s debate, that had been raged on the right to privacy.

As aforementioned, the proposed preventive framework will usually lead to significant compliance costs for various private businesses. This will be due to the fact that the bill will effectively regulate the data that is used in all sectors across the society for economic activity.

Thus, this will, quite simply, establish new compliance requirements that will need to be followed by the vast majority of affected businesses so as to be on the right side of the law.

data protection bill

Now, why it poses a big threat is due to the fact that most of the businesses in India are quite small. Thus, such overcomplicating, and demanding compliance requirements would be particularly onerous for them. Subsequently, this will also force the government to compel the businesses to share certain nonpersonal data with it.

This directly will have a negative impact on innovation and economic growth in the long run.

The list of detestable attributes of the privacy laws goes further. Another major issue that has been pointed out by various analysts is that the bill effectively proposes to design or construct the Data Protection Authority.

It is to be noted that the same authority or the body will be tasked with the power to regulate the provisions of the bill and frame fresh regulations on various issues.

These issues can be forming regulations on mechanisms for taking consent, or perhaps the limitations on the use of data. In fact, the body is also powered to form or alter rules for the cross-border transfer of data.

Thus, it can be rightfully stated that the supervisory mandate of the body known as the Data protection authority is rather quite sweeping and immense.

personal data protection

The power is particularly immense as the body has the power to effectively regulate a wide array of preventive obligations. These preventive obligations can involve various facets like security safeguarding and transparency requirements, that have to be implemented by businesses.

Thus, given various contentious aspects of the bill, will the government wake up to the discrepancies and will try and mitigate the unwarranted consequences of the bill? It is something only the government’s agenda and long-term goals can answer.

Tags: data protection act, data privacy act, personal data protection act, data protection law, personal data protection bill, personal data protection, data privacy laws, data protection bill, data protection act India, data protection regulation, data protection authority

Dec 31
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banking code in india

Criticism of Banking Code in India is Unwarranted

By Banking No Comments

Criticism of Banking Code in India

It is no news that the landmark economic reform in the Indian banking sector, in recent years has gathered intense criticism of the banking code in India.

The criticism comes from various sectors that perhaps are not finding the reform quite affable for their needs. It is to be noted that the genesis of the Insolvency and Bankruptcy Code (IBC) was at the back of the debilitating bad loans crisis that was severely crippling the Indian banking sector.

With its immense effects on the economy, the problem was proving to be a debilitating, adverse hurdle for the growth of not only the banking sector in India but also the economy.

The economic reform was introduced for timely resolution of the bad loan crisis. But given the progress that has been made in recent times, it can be stated that the reform has largely been ineffective at best and counterproductive at worst.

Though such assessments or rhetoric have been made under political influence or bias, scrutinizing the problem through the data-intensive and objective lens for its critical evaluation is necessary.

bankruptcy code in indiaPrimary Criticism of Banking Code in India Against IBC

If the concerns are to be scrutinized, the primary concern that shores up is that the mechanism has garnered paltry recoveries, which has made the reform a mere legal mantelpiece.

Such criticisms have been made by the critics who have adamantly stated that instead of materializing as a powerful tool for economic value creation in the banking industry that should have helped to mitigate the crisis, it has merely reduced to being an incompetent reform. Given the aforementioned arguments presented, it can be stated that the arguments are based on some very fragile assumptions.

It cannot be denied that the banking processes involving recoveries etc. usually are impacted by various macroeconomic and environmental events. This usually leads to the unstable value of the asset in question over time.

But is the macroeconomic environment solely responsible for such variable value? Perhaps not. The competitive dynamics of the industry within which the firm also play a crucial role.

Therefore, to truly scrutinize and evaluate the IBC on recoveries, we need to take into consideration the diversified that includes relevant facets of several industries and business cycles.

If the data by the apex bank is to be analyzed, the average recovery for three years has been around 45 percent, which according to critics has been dismal.

On the contrary, many firms and critics have come out with even lower statistics of a mere 24 percent in cases of individual recoveries.

Thus, given the critics’ harsh assessment of IBC, the critics need to be reminded that absolute numbers don’t matter or aren’t as meaningful as many might consider them to be.

insolvency and bankruptcy code Additionally, the critics need to be reminded that every process has a distribution of outcomes that may be skewed. Thus, given the ineffectiveness of absolute numbers, analysis in comparison to benchmarks need to be made.

Recovery under the IBC can be evaluated only with respect to benchmarks, in order to ensure unbiased review.
The most comprehensive benchmark is the rate of recovery that can be gained under alternate mechanisms. ARC, also known as the Asset Reconstruction Company, according to RBI, As RBI data shows, average recoveries for asset reconstruction companies (ARCs) have largely languished for the same period, remaining under 30%.

Similarly, in the case of Debt Recovery Tribunals is to be scrutinized, the recoveries under the reform have effectively surpassed the 45% recovery mark only thrice in the mammoth 17-year period. In fact, if the data for the last few years is analyzed, the recovery has been languishing with single-digit recovery rates.

Therefore, to draw out a comparative analysis, it can effectively be stated that IBC’s recovery rates have not been abnormally low. one can even state that as a matter of fact, the recovery rate has been even higher than the historical averages of alternate resolution mechanisms aforementioned.

But how does this analysis take into consideration the abysmally low recovery rates in certain individual cases? It is to be noted that is effectively true for any bankruptcy process.

According to many findings, it has been found that between the financial years 1982 and 1999, the average recovery rate for American companies has stood at 51.1% with a standard deviation of this rate being as large as 36.6%.

This effectively and emphatically implies that there are various causes of high and low recoveries and what we look at is mere average.

Thus in totality, despite the blaring criticism by the critics and the limitations of recovery data that do not help in an objective analysis of the matter at hand, it can be emphatically maintained that the stance that India’s IBC is sham or incompetent is completely unwarranted and misguided.

As aforementioned, the averages and absolute numbers do not showcase the competition for the reality of the reform and thus objective and rational analysis requires comparative analysis so as to minimize the bias.

banking sector in indiaBut it is also worthy of mentioning here that the IBC reform is not infallible or perfect either. With the large number of cases increasingly being liquidated, one can state that IBC too requires restructuring and up-gradation of its own.

Given the importance of IBC in the Indian banking sector, its success and smooth functioning are of utmost importance for growth in not only the banking sector but also the economy.

Thus, in totality, IBC can neither be characterized by blaring criticism nor euphoric appreciation.

Tags: bankruptcy code in india, insolvency and bankruptcy code, banking sector in india, the insolvency and bankruptcy code, banking code in india, ibc insolvency and bankruptcy code, banking industry in india, banking system in india, insolvency and bankruptcy code act, indian insolvency and bankruptcy code.

Dec 31
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rbi monetary policy, hfc lending

Covid Resurgence Will Force to Keep The RBI Monetary Tap Open, Glogal Bond Markets Shown

By Banking No Comments

RBI Monetary Policy & Global Bond Markets

  1. The RBI monetary after the pandemic had curtailed the freedom of many central banks to play with the interest rates for a while. With the increasing option of lower interest rates that were needed last year, the accommodative policy might now be coming to an end.
  2. This would mean that the central banks around the world would surely have their work cut out. But is it? The answer is much more shades than plain black and white.
  3. It is to be noted that the pandemic had been receding across the globe, leading to lower cases.
  4. But just when the monetary authorities were emphatically and effectively preparing the ground for a reversal of their ultra-loose policies that were earlier adopted in response to the coronavirus crisis, it clearly seems that such an option won’t be viable for some time now.
  5. From bracing for interest rates in major economies to head northward sooner than later, global bond markets on Thursday took a 360-degree turn.
  6. But what circumstances compel the banks to derail their plan to tackle inflation? The discovery of a new potentially dangerous and deadly variant of the coronavirus in South Africa, Hong Kong, and Hong Kong has sent the world order into a frenzy all over again.
  7. This has been coupled with the resurgence of cases in the western world, especially in Europe. This has emphatically led to the restrictions that have been placed on the economies and world travel which will have its consequences in the long run as the risk to global growth has intensified.
  8. This claim can be corroborated by the price action in the global bond markets. It is well known that decision-making in the market is laced with indecision, irrationality, and whims.
  9. This has been recently shown in the market as instead of getting ready for imminent policy normalization, as should be expected of the market, the bond markets seemed to be expressing the jubilant and exuberant view that the monetary accommodation would stay for a while longer.
  10. Thus, one can quite clearly state that the investors are actually betting on the central bank’s accommodative, helping policies, to usher them out of the state of crippled finances.

But what does all this narrative mean for India? It is to be noted, that according to the reports, the Indian sovereign bonds have been enjoying the yield on the 10-year benchmark of 6.10 percent.

rbi monetaryThis perhaps is due to more palpable reasons that prior to the odious detection of the fresh variant in South Africa, the market was holding a stronger view of the bank’s interest policy and was emphatically anticipating the process of raising interest rates.

This was being anticipated in its next policy statement, which would have been achieved by raising the reverse repo rate. Therefore, this would have led to the narrowing of the width of the liquidity adjustment facility corridor.

Though, it is worth noting here that the central bank has already paved the way for this step. This is due to the fact that the quantum of funds has been withdrawn and the cutoff rates have been set at a variable rate.

But even though through all market actions, the money markets may have aligned to the new expectation of the reverse repo rate, the actual act of raising the reverse repo rate would itself have significant implications.

This would namely be the ultra-loose accommodation being reversed. This is merely due to the fact5 that the banks have the credibility factor and one would hardly expect that the central bank will actually reverse its stance.

This fact spe3cially garners more importance due to the fact that the bank has officially started the process of lifting interest rates.

central banksBut given the strong proposition above, is there no other narrative that is prevailing in the market? The answer is apparently no.

The other narrative that is floating in the market is that given that India is still a nascent economy, that is recovering and is facing a threat of a new variant, it is quite a possibility that Governor Shaktikanta Das will indefinitely keep all rates on hold.

This can also be anticipated as the central bank might choose to evaluate the global situation to obtain more clarity on the spillovers for India before it makes a major policy change.

Though, if the issue is to be scrutinized through an affirmative lens, one can state that India will bear the salutary impact of the new risk to global growth by a decline in international crude oil prices that has been pestering the p[public for quite some time now.

Even though, as has been witnessed, the government has reduced excise duty on major petroleum products, it cannot be forgotten that over the last couple of months a significant risk to inflation has emerged as the outlook on the trade deficit is widening.

global bond markets

Thus, it can be effectively argued that the scales are perfectly balanced for the central banks as there is almost a consensus that the reverse repo will be hiked, as the market rates had aligned perfectly to a higher rate.

But given the recent circumstances, one can add that RBI can still maintain the status quo due to changing dynamics of world affairs and trade.

Even though some might argue that the agenda for hardening the inflation has taken a backseat, for now, one can never be sure in which option’s favor will the tables turn.

Tags: central banks, global bond markets, rbi monetary policy 2021, rbi monetary policy, rbi monetary policy repo rate, rbi policy, rbi monetary policy today, new rbi monetary policy, rbi monetary.

Dec 31
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corporate social responsibility

Corporate Social Responsibility Regime in India

By Corporate Law No Comments

Understanding Corporate Social Responsibility

Corporate Social Responsibility: Capitalization has been a contentious topic for decades. Wit5h various civilizations tilting towards the socialistic regime, the corporate world’s faster growth has been hard to miss.

With the mixed economy shenanigans and advantages, harmony between the public and the private sector is needed.

With various high profits that accrue to the capitalistic economies, condemnations in the form of wage discrepancies and violations, corporations have to commit themselves to not sever the neutrality line between the socialists and themselves.

With the need to maintain harmony, the adoption of Corporate Social Responsibility becomes a pressing need for corporations.

corporate social responsibility in indiaIt is to be noted if Corporate social responsibility is to be deconstructed, in simpler words, it means a concept that effectively tries to instill a sense of social responsibility amongst various corporations in the economy.

Well, the need for corporate social responsibility comes from the fact that society essentially is of the opinion that it emphatically funds or contributes to the businesses of corporations in one way or the other.

This provides impetus to the growth of most businesses. Thus, given the pertinent argument, corporations that in some way or the other benefit from the society should effectively recognize and realize such contribution through their share.

Thus, it can be maintained that CSR strategically nurtures a businesses’ sense of responsibility towards society.
Although around the world the activity of CSR is voluntary, India is one of the first few nations that legalized mandate CSR in the year 2014.

CSR is all wonderful for society and the world, but do the corporations, whose sole motive is profits, find any utility in conducting such activity? As a matter of fact, there are various advantages for the well-established corporations that carry out their social responsibilities.

One of the advantages that the company enjoys when it fully discharges its responsibility is a good reputation amongst the citizens and are normally considered and regarded as virtuous corporates amongst citizens.

It is no news, that in India, moral policing plays a huge role in determining the popularity and the fate of anything and everything. Thus, conducting social responsibility adds brownie points for the corporations working in India.

corporateOther than enjoying popularity amongst the masses, the corporations also can use the opportunity to make positive contributions toward cultural, social, economic, and environmental issues that are increasingly prevalent in society.

As a matter of fact, it cannot most certainly be denied that healthy corporate employee relationship leads to increased efficiency in the organization. Indulging in CSR activities presents an opportunity for corporations to strengthen their bond with their employees.

But the key growth factor that does not lend the property or reluctance to the law is change. Though CSR was effectively mandated under the law by bringing amendments to the Companies Act of 2013, the provisions strategically regulating CSR activities of companies have been evolving with time.

What makes the act for the company less of a liability is the fact that the amendments caused to CSR were particularly aimed at mostly motivating the companies to develop a genuine desire to take up a social cause and not burden them with social work.

Thus, one can attribute the mild curtailment of freedom as the main driver of the success of CSR.

It is to be noted that prior to the Companies act of 2013, CSR activities in India were merely seen as a philanthropic activities. But with the change in 2013, which saw the replacement of the Companies Act of 1956, CSR activities become the work of every organization.

But this gives rise to a pertinent question what really is the role of the corporate social responsibility committee in India?

It is to be noted that the committee works to formulate and effectively recommend to the board the amount of expenditure to be incurred on the activities.

Alternatively, it also assists in monitoring the Corporate Social Responsibility Policy of the company from time to time.

csr corporate social responsibilityThe board of the companies usually approves the Corporate Social Responsibility Policy. The board also strategically ensures that the activities are effectively included in the Corporate Social Responsibility Policy of the company and are in fact undertaken solemnly by the company.

In order to emphatically counter any discrepancy, the board also ensures that the company spends, every financial year.

The criteria are that at least 2% of the average net profits of the company that are made during the three immediately preceding financial years should be used for CSR activities.

Thus, in totality, one can maintain that the CSR activities in India are worked out efficiently under a system that solemnly ensures that the system is worked out in a proper manner.

In fact, given the higher scope of the policy, amendments were made in If the company fails to spend such amount, the financial year 2019.

In order to inculcate the responsibility in various corporations in India, the newer amendment has suggested that if any amount that is remaining unspent, shall emphatically be transferred by the company within a period of thirty days.

This should be transferred to a special account to be opened by the company, which will be effectively called the Unspent Corporate Social Responsibility Account.

Thus, in recent years the government has been trying to incorporate responsibility amongst the corporations and making it arduous for them to skip their social responsibility.

CSR has a high potential for the future, will the government be able to make any fruitful gains out of it, is something we’ll have to wait and scrutinize.

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Dec 31
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consumer protection act 2019

Company’s Unfair Trade Practice With Special Reference To Consumer Protection Act 2019

By Hospitality, Others No Comments

Unfair Trade Practice With Reference to Consumer Protection Act 2019

In recent times, the topic of consumer protection law has garnered much attention company’s among the authorities and the citizens around the world.

Recently, the consumer protection Act of 2019 replaced the decades-old Consumer Protection Act of 1986. It is to be noted that the newer act was enacted with a promising view to widen the scope of consumer rights.

This was emphatically done to bring under its preview the field of e-commerce, teleshopping, direct selling, and other multi-levels of marketing.

This is quite crucial due to the fact that India is entering into the age of digitalization with no well-formulated laws to guide and protect consumer interest.

Thus, the newer laws bring into effect the scope of consumer protection in the day and age of digitalization which might turn out to be a nightmare for the users.

The act tries to enact stricter provisions that will aim at revamping the settlement and administration process. This will be done by emphatically and effectively imposing stricter penalties.

unfair trade practiceIf the newer consumer protection act is to be scrutinized, the arbitrariness surrounding the definition of the consumer has been cleared.

As per a certain Section 2(7) of the 2019 Act, a consumer is any such person who effectively buys and ultimately consumes his or her purchases or avails services for his or herself.

This comes in contrast to the consumer who has availed of such services or goods for the purpose of commercial use and resale.

As a matter of fact, the definition specifically and strategically makes use of the expression “buys any goods” and “hires or avails any services”. This effectively includes all online transactions that are specifically conducted through electronic means or teleshopping or direct selling.

As aforementioned, the main jewel of the act is online transactions. Thus, one can effectively argue that the newer laws have been drafted keeping in mind the growing e-commerce business in India that is providing impetus to the advancement and usage of technology in the economy.

unfair trade practices consumer protection act 2019Unfair Trade Practices

It is worth mentioning here that talks about consumer welfare and protection, also bring to the fore the discussion about unfair trade practices.

Thus, given the importance and the certainty of the issue, how have the unfair trade practices been represented in the act? Section 2(47) of the Consumer Protection Act, 2019 largely and mainly defines ‘unfair trade practice’.

An interesting twist of events presents the fact that the scope of the definition of ‘unfair trade practice’ has been emphatically broadened. But what does this broadened scope of the definition encompass?

It is to be noted that the definition now includes the practices such as strategic manufacturing or offering spurious, deceptive, or bogus goods for sale.

Thus, the act takes into consideration the adaption of deceptive practices for providing services that might be adopted by the corporations that might lead to lower utility or welfare of the public.

The act also takes into consideration the factor of accountability as its definition also takes into consideration the act of not issuing proper cash memos or bills for the services that are effectively rendered and for the good that is sold.

The inculcation and adaptation of the healthy receipt and cash memo practice will effectively help the authority to track the bogus corporation and companies that could be conducting felonies.

In fact, the law has gone even further to include provisions to protect the identity of the public or their personal information. This is needed as the bogus corporations etc. usually share the customer’s intimate details with any other person not in accordance with the prevailing laws.

consumer protection bill 2019It is to be noted that the repealed consumer Act of 1986 did not include in its definition the scope of online misleading advertisements. Thus, these have been added to the 2019 consumer Act.

In addition to all the malpractices that are conducted by bogs organizations, the definition now also includes the concept of an unfair contract.

It is to be noted that the ‘Unfair Contract’ is defined under Section 2(46) of the Act. To define this aspect of the law, it effectively refers to any contract that is between a consumer and a manufacturer.

This can also be between the consumer or the trader or the service provider whose terms bring about a significant change in the consumer rights under the Act.

Given the aforementioned provisions, it is necessary that there is an authority that enables, monitors, and regulates the laws and protects the rights of the consumers.

To enable the same, under the Act of 2019, the law effectively had set up a Central Consumer Protection Authority (CCPA).

The body was established to effectively monitor and regulate matters involving the violation of consumer rights and unfair trade practices aforementioned.

In addition to both, the body will also monitor the misleading or false advertisements by bogus organizations and will help in the enforcement of consumer rights. Here, the members will be effectively appointed by the central government.

the consumer protection act 2019Though, there are certain discrepancies that have surfaced since the inception of the fact. These allegations pertain to the undue influence of politicians the consumer rights and the authority of censorship that the government will effectively enjoy.

With growing dissent in the economy in different spheres of life, the dissenters feel, such undue authority might lead to the discrepancy and undue censorship that might lead to curtailment of freedom of speech.

Though, in spite of certain lacunas in the Act, one should strongly note that the Consumer Protection Act of 2019 is a largely positive step toward the reformation and development of consumer laws in the country.

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Dec 31
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china bans cryptocurrency

China Bans Cryptocurrency Transactions

By Others No Comments

China Bans Cryptocurrency Trading & Transactions

China bans cryptocurrency on its instincts and nonaccommodative attitude towards the cryptocurrency, it has finally banned cryptocurrency transactions in its country.

Though trading was already illegal in China, such activities were usually carried out through international platforms. But with the recent legislation, China has brought in serious laws leading to penalization of any nationals within the geographical boundary and those Chinese individuals outside of China.

Thus, one can effectively state that China has effectively intensified its war against cryptocurrencies.

It is to be noted that with the advent of the newer laws, the investors in the digital contentious asset will find themselves on the wrong side of the law.

china bans cryptocurrency tradingThus, individuals will face legal risk if they indulge in cryptocurrency transactions openly or clandestinely. In fact, not only individuals but also organizations participating in such virtual currency trading will come under the ambit of China’s authoritative laws.

The seriousness of the law that has been proposed can be conjured from the fact that even Chinese nationals that are working overseas aren’t exempt from it. This comes after the Chinese government thoroughly mentioned that it will thoroughly examine and investigate such nationals too according to the law.

As it is quite natural, the bitcoin or the contentious digital market got into a frenzy when such laws were announced by the Chinese government.

This led to a serious drop in the market given that investors’ confidence was dashed by the Chinese government. According to the reports, the Bitcoin market was down by an effective 4.5 percent, whereas on the other hand, Ethereum was down by a significant 7.5 percent. Enter your email to get the Ars Technica newsletter

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but this gives rise to a pertinent question was the move by the Chinese government quite immediate without any prior notice?

It is to be noted that to state that there were no prior warnings by the authorities will be a statement that will be farther away from the truth.

The Chinese authorities, time and again, have been dropping hints about banning cryptocurrency mining and severely warning financial institutions to not effectively participate in the same.

Talking about another sector that is quite related to such a debacle is the real estate sector. One sector, other than the crypto sector, that has been gaining much traction in China in recent months, is the retail sector.

With the anticipated debacle of the Evergrande, the biggest real estate developer, many are comparing the current detestable scenario with the Lyman Brothers’ odious financial fallout.

Thus, it is quite pertinent that the connection between the two sectors is scrutinized as the crypto crackdown comes at quite in time when China’s real estate sector is facing a liquidity crunch.

It is to be noted that the retail sector in China is the biggest contributor to the GDP in China, making one-third contribution to the economy.

cryptocurrency trading in china But with the virus exacerbating the financial health of the sector, many were cashing on the loans that were being provided by China for the development of unfished housing in the country. But with the onset of the pandemic, population migration to such households has dropped.

But Chinese authorities, instating its authoritative stance have stated that the houses are for living in, not for speculation. Thus, Cinna is trying to control the sector, when the sector itself is riddled with unfinished or unoccupied housing.

According to the reports, it has been found that the land sales have hit an all-time low with sales down by 90 percent year over year.

On top of this, Beijing is trying to rein in the sector by trying to balance the ratio of debt and emphatically lower them. This is putting undue pressure on the real estate sector.

It was in fact, due to this factor, that Evergrande had found itself at the alter of China’s mercy due to Communist Party’s new demands. One can state that such a decree was quite crippling because even before the decree, the real estate developer was already in trouble.

Given how the sale shave slowed and how the Chinese banks are trying to balance the debt ratio, Evergrande effectively hasn’t been able to generate much cash or revenue that is required to finish projects.

And since it does not have the prerequisite finances to complete its pending projects, it definitely will not have the finances to pay back its’ debt or the interest on it.

china bans cryptoThis has emphatically led the government to restrict Evergrande from issuing any new bonds to significantly pay off its near-term debt.

It is due to the bleak chances of the Evergrande estate developer and the high risk of financial fallout in the economy, that investors are trying to move their capital out of China.

This also comes after falling Chinese growth prospects due to falling demand and investments in the economy. Such capital outflows are what brings us to connect the cryptocurrency crackdown episode and the Evergrande debacle.

The Chinese government has been significantly and emphatically trying to restrict the flow of capital outside the country. This is being done to keep investors circulating their money within the nation’s economy.

But, given the anonymous character that is provided by the cryptocurrency, it is quite hard to regulate the same. Thus, this is the main reason that has motivated the Chinese government to crack down on the transactions.

Many might consider such a crackdown due to various reasons like pollution generation through bitcoin mining. Though, this is quite true, but not significant enough to make the Chinese authorities ban the transactions altogether.

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Dec 31
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competition commission of india

Competition Commission of India – CCI Penalization of Carlsberg

By Cases, Others No Comments

Competition Commission of India Penalization of Carlsberg

In a recent turn of dramatic events, the Competition Commission of India has effectively imposed humongous penalties on Carlsberg India Pvt Ltd (CIPL), United Breweries Ltd, and all the other India Brewers Association.

In addition to the aforementioned names, additionally, 11 more individuals have been penalized for the cartelization in the supply and sale of beer.

If the enormity of the penalty is to be analyzed it can be conjured from the amount of penalty that stands effectively at Rs. 873 crores.

Quite interestingly, the Anheuser Busch InBev India was also found guilty to be part of the cartel fixing in which other associations were busted.

Though InBev was found to be involved in cartel fixing for beer prices it was exempted from the imposition of a fine on it. Why was this? This was mainly due to the fact that it was the company that was the first company to effectively and emphatically provide key evidence in the investigation against the detestable mechanism.

functions of competition commission of indiaThe reasons for penalization by CCI

It is no news that CCI is the upholder of competition norms in India. With proofs and pieces of evidence about cartel fixing, the involvement of CCI in the agenda was quite necessary and crucial.

According to the reports, thorough searches and seizures were carried out by the Director-General of the CCI. During investigations, it was found that regular communications used to take place between the three companies.

These conversations indulged in topics pertaining to the coordination of price hikes that were immediately submitted to state authorities for their approval.

It is to be noted that consumer welfare was being compromised given the cartel formation that had taken place between the competitors.

Taking into consideration normal laws of economics, healthy competition in the market sustains consumers’ welfare and leads to innovation and fair prices that are calculated using the demand and supply forces in the market.

But with investigations, it was revealed that the various basics and prerequisite of consumer welfare was being compromised for higher profits.

The investigation conducted showed that key managerial personnel used to email the competitors about the price hikes they were planning well in advance.

This was done to effectively coordinate and propose to the state authorities in various states for coordinated price hikes.

The whole agenda consisted of discussions about price strategy before hitting the market coupled with holding discussions about prospective quotes and the way forward.

This exercise was significantly carried out to rehearse for appearing before state excise departments.

In fact, another strategy effectively included the agenda to particularly meet with excise authority under the umbrella of the AIBA. This was done for convenience and so that better chances can be conjured for getting proposed price increases approved.

This involvement of AIBA also covered it under the ambit of CCI’s wrath. This led AIBA to be fined for its detestable role in arranging discussions between the various beer companies on price discrepancy.

Talking about the evidence that was thoroughly scrutinized after the revelation, it was noted that in the case of Maharashtra, odious price revisions by the UBL and AB InBev since 2011 were unchangingly close in timing with Carlsberg India.

Thus, this emphatically points towards the fact that Carlsberg had joined these two companies in making price revisions uncannily around the same time since 2014.

role of competition commission of indiaBut was the price the only characteristic that characterized such cartel fixing? Perhaps no. even the supply was a characteristic that was used to incur profits and carry out fraudulent activities.

According to sleuthing by the CCI, pieces of evidence were found that beer companies had also coordinated cuts in the supply of beer in various states like Maharashtra, Odisha, and West Bengal.

This was effectively done to strongly and adamantly oppose the welfare moves by the state governments which tried to hike the excise duties or had tried to reduce the price of beer.

Quite interestingly, it was found that in pursuit to cut costs, the companies namely UBL and AB InBev had entered into any agreements.

The agreement pertained to the price at which they would procure used bottles from various bottle collectors so that these can be effectively reused at their breweries.

But this gives rise to a pertinent question what rationale was derived from these companies to commit such odious activities?

It is to be noted that the reason cited for the same by key managerial personnel who had been fined was the excessive need to seek approvals from state authorities.

This was regularly done for any price revisions. Thus, according to the defaulters, the excess authorities policy of the state led to the need for the formation of coordination among the competitors.

In fact, the executives have pointed out to a greater degree the government’s redhandedness stating that price changes can only be permitted on three specific dates in a year in a state like Karnataka, which is quite nonaccommodative and crippling.

To quote the submission that was made to the CCI, it was stated by UBL that “draconian laws and practices adopted by the states make it impossible for Beer companies to compete in the ordinary course of business,”.

the competition commission of indiaWhy was AB Inv let go easy?

Though all the three defaulting companies have applied for the reduction of the penalty, AB InBev strategically was given a 100 percent reduction in penalty.

This was mainly due to the fact that the company had effectively and emphatically explained the nature of the cartel and had systematically submitted evidence of email communications.

Breaking down the structure of the penalty, it is to be noted that a fine of Rs. 751.8 crore was imposed on UBL and additionally, Rs 120.6 crore fine was imposed on CIPL.

This was after reductions were included in penalties of 40 percent and 20 percent respectively. These were offered for cooperation that was shown with the investigation by the CCI.

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