Others

Private Equity in Times of Pandemic

The pandemic has led private equity in India to step into the current crisis riding a decade-long growth wave in transaction volumes and valuations. The value of some investments and investor confidence has been fairly dampened since the outbreak of the virus which continues to persist yet now. 

The global financial crisis of 2008-09 for instance can be looked up, to provide a few insights into how PE funds might navigate the fallout from the pandemic. If we take history as a guide, many PE funds have been previously seen to cruise through the crisis staying on the sidelines, a little too long, which could lead to missing out on crucial investment opportunities. 

Although there could be a sharp fall in deal-making in the short-term, PE funds are expected to learn from the past as high returns often emerge in times like these and can offset the losses during the downturn.

The returns over the next couple of years will depend on how fund managers react over the next 12 months. However, PE firms have massive amounts of unused funds that are readily available at their disposal coupled with money that has been raised but not yet invested.

The subsequent expectation is that a large part of this money shall be expected to be earmarked for emerging markets, India being no exception. Private debt funds and special situation funds are more visible in the market and can help provide liquidity to businesses that are experiencing cash crunches, the much-required prerogative currently.

While several investors are holding back until the ramifications of the pandemic become clearer, a few distinct themes are emerging that could shape private deal activity as the new normal evolves which include:

• Deferment of deals: Deals are being deferred as investors are speculating the damage of the COVID-19 caused pandemic. While the dealer network is highly robust, deal flow is expected to be slow specifically in the next couple of quarters. The driving factor here to determine the consequences would be the availability of the dry powder with the equity funds.
• Protecting existing portfolio: The primary goal of funds in the short term will likely be to look after portfolio companies. This would eventually take precedence over the search for new investment opportunities as some portfolio companies may need additional financing amid liquidity concerns owning to the government-enforced long shutdown in the wake of the spreading virus.
• Difficulty in managing the valuation conflict between buyer and seller: Financial markets have been significantly disrupted across the globe. The pandemic has triggered a rout in the stock markets and market volatility has increased. Although PE investments are generally less volatile than public investments, there might be valuation challenges as sellers may be reluctant to part with assets given the precipitous fall in valuations. This could delay deal activity in certain cases.
• Availability of leverage for buyout deals: Of late, a higher amount of leverage has been used in buy-out deals. The availability of debt financing from banks could be a challenge and may cause a slowdown in buyout deals. Given the significant amount of available funds, of which a large part is for buyouts alone, deal-making could see an uptick, especially in distressed asset situations.
• Private debt funds and special situation funds are expected to be more active: There is expected to be liquidity pressure on businesses owing to COVID-19-related disruption in demand. PE funds are expected to capitalize on this opportunity through innovative solutions such as debt restructuring and bridge financing.
• Increase in private investment in public equity (PIPE) transactions: As valuations in public markets decline, PIPE transactions are expected to pick up as PE funds take positions in quality assets at significantly cheaper valuations.
• Sector expertise will become more critical than ever: PE funds are expected to focus on sectoral themes with pharmaceuticals, technology, digital, and healthcare expected to drive interest whereas the revival of sectors such as financial services, real estate, and non-essential consumer goods and services may take some time. It will remain difficult to form an investment thesis for sectors such as aviation, travel, tourism, and hospitality.
• Expected change in scope of due diligence: the current crisis highlights the importance of factoring in multiple scenarios and modeling unpredictable disruption in due diligence. Hence, the scope of due diligence will change significantly over the near term.

In light of these circumstances, PE funds will need to respond swiftly and strategically to the new business normal and drive transformation for companies. The pandemic has brought about an extraordinary combination of quality assets going cheap and investors being cash-rich.

The funds that can find the right investment opportunities in this difficult time will not only emerge stronger but also generate significant returns in the coming years.

Tags: global financial crisis, the global financial crisis, private equity financing, private equity funds in india, pe funds in india, private equity, private equity fund, private equity in india, investor confidence, global financial crisis of 2008, pe funds

Work Environment: Why Organisations Terrified About Reviving

The effect of COVID-19 flare-up depends on the cataclysm’s gravity, degree, and distribution, which remains unknown even today. The mass transition to WFH has numerous advantages and offers a path to being relevant during such quick-changing dynamics and as a shield from contagion. 

During the lockdown, the IT industry transitioned to the WFH model relatively easily providing business continuity to clients without depreciation in service quality or productivity. This was possible due to the industry’s strict adherence to quality processes and the availability of communication bandwidth both from homes in cities and towns.

With unhampered business functioning, other industries attempted to mirror the model, but not without disruptions and a dip in quality.  This endeavor across industry verticals is in line with the WHO directives too. 

On-site versus work from home

The main concern for organizations is the effective administration of the workforce with the assistance of advanced apparatus, technology-empowered processes, and guaranteeing that everybody is doing their individual errands. Insurance of information and better correspondences have to be kept in sight as WFH turns into a drawn-out plan B.

Organizations have to put resources into improving information security and framework. The mass integration of tech-powered business operations and cloud-based data storage facilities have eased the operations across industry verticals barring essential service workers and employees that have held the country together during such unprecedented times.

So where’s the glitch

The wrath of the pandemic has hurled the entire human species into their homes. The widely prevalent havoc wreaked by the pandemic has been a deterrent for many companies with an underlying fear that resuming offices and returning to the conventional method of functioning is an open invitation to infection. A single positive case may lead to contamination of the work environment, which spells disaster for the entire organization.

While companies deploying essential workers to carry out specific functions take measures to forestall the spread of the infection, it is pertinent to note that such measures do not guarantee protection from the virus. However, with the government unlocking states in a phased manner, companies are set to redefine the employment experience by striking an optimum balance between business continuity and community health and safety. 

From a long-term standpoint, WFH may serve as a supplement, rather than a substitute for conventional office environments. However, this common parlance has posed a new challenge with emerging cases of cyber-attacks, frauds, and crime that can seriously and negatively affect the already ailing business enterprise and could open the doors to more invasive forms of government prying in the future. 

Hence, there is a need to develop good cyber-security habits to reduce associated risks amidst the mass digitization of businesses. Moreover, proprietary confidential data and information pertaining to businesses are being accessed from unsecured laptops and desktops, thereby leading to increased exposure to phishing, email scams, and ransomware attacks by cybercriminals. 

Managers are in dire straits to reassess the legal, technical, and personal dimensions of the cyber-security threats to their data, and proactively evaluate loss prevention processes.

The way forward

Despite high cyber-security risks, WFH may aid managers to reduce unprecedented losses incurred on account of the pandemic by saving on rental expenditures and other operational costs to keep the business afloat. Such mass adoption of the WFH method may bring momentary respite to numerous businesses. These are trying occasions for us all. Companies and their employees must build a culture that creates a conducive environment for the growth of both parties. 

As time goes by, a widespread pandemic event will assert more pressure on existing resources, infrastructure, and technology, resulting in a significant depreciation of productivity and eventually that of products and services.

As resources become constrained, firms must constantly re-prioritize the delivery of products and services that are absolutely critical to meet customer needs, provide market stability, and foster development. Thus a calculated deviation from the standard company policies is the need of the hour. 

Companies must expand on existing human resources, finance, legal, operations, and business processes to accommodate certain critical exceptions, and clearly communicate the revised policies, criteria, and processes to allow such waivers in an accelerated manner.

All potential changes to existing policies should be carefully reviewed by risk management, compliance, and legal teams prior to being finalized and should take into account what risks are appropriate to accept and any legal and jurisdictional nuances across geographies. 

As the world recoups from the pandemic, a redefinition of normalcy is well on its way.

Tags: Work Environment, the work environment, hostile work environment, healthy work environment, workplace environment, ideal work environment

Special Purpose Vehicles – A Modality For Development

Special Purpose Vehicles (SPV) a catchphrase during the financial crisis of 2008 has assumed center stage as companies and financial institutions scramble for monies in a contracted economy in the wake of the COVID-19 pandemic. Empirical and anecdotal evidence suggests that SPVs have served the development community and beneficiaries well from a historical standpoint.

The key aspects of such SPVs, that led to their popularity, are our absorptive capacity, value for money, flexibility, bankruptcy proof, the ease with which multiparty funding can be handled, longevity, legitimacy, and other valuable characteristics. However, it remains to be examined whether this scheme will stand the test of subsisting unprecedented times.

RBI’s Latest Announcement

Recently, the Reserve Bank of India (RBI) announced that SBICAP, a subsidiary of the State Bank of India (SBI), will set up an SPV and operationalized ₹ 30,000 crores for this scheme. This SPV shall serve the special purpose of purchasing the investment-grade commercial papers and non-convertible debentures of NBFCs and housing finance companies (HFC) until September 30, 2020, and is expected to recover all dues by December 31, 2020.

The scheme is aimed at improving the liquidity condition of NBFCs and HFCs through an SPV, preventing any potential financial or systemic risks in the finance sector, which is closely intertwined with industries across verticals, and ultimately ensuring stability in the economy.

However, the RBI lays out stringent requirements for beneficiaries under the scheme, some of which are as follows: a) the NBFCs/HFCs must be registered with RBI

b) the NBFCs/HFCs must have been profitable in at least one of the two preceding FY 2018 or FY 2019

c) fulfill the requirements related to Capital To Risk-Weighted Assets Ratio (“CRAR”), Capital Adequacy Ratio (“CAR”) and Non-Performing Assets (“NPA”), Special Mentioned Accounts (“SMA”), and d) the NBFCs and HFCs must be rated by an investment grading agency approved by the Securities and Exchange Board of India (“SEBI”).

A Solution with underlying risks

The shadow financing sector was already struggling with funds in light of the IL&FS crisis when COVID-19 hit, jeopardizing the survival of the sector at large. RBI’s notification attempts to address the liquidity position of NBFCs/HFCs through SPVs with the primary objective to avoid any potential systemic risks to the financial sector.

At the outset, this scheme acts as an enabler for NBFCs and HFCs to get investment grades or a better rating for the bonds issued thereby augmenting the flow of funds from the shadow financing sector.

Moreover, the scheme would be a one-stop arrangement between the SPV and the NBFCs without having to liquidate their current asset portfolio and merely transfer their financial risks. The said advantages bring the government closer to its objective to eliminate or mitigate any potential systemic risks in the financial sector. 

However, these measures lack concerted and concrete action. 

Firstly, SPVs entail high costs for setting up such as the cost of incorporation, registration, stamp duty at the time of transfer of the company, and continuous compliance with FASB Rules. In addition to high costs, the efficacy of the SPV until September 30, 2020, is likely to be vociferously criticized and questioned as the move is a 3-month short-term measure as opposed to the industry requirement of over 2 years.

The sector is in dire straits for long-term funds so that they don’t run into an asset-liability mismatch; however, the present move may lead to a vicious cycle of extending loans. For instance, if somebody were to draw three months’ money, they will have to create another liability at the end of 90 days to be able to repay this.

Secondly, the high thresholds and requirements set by the RBI for NBFCs and HFCs are likely to face criticism for the reason that many numerous entities in dire need of financial support and liquidity will be left out of this scheme, thereby providing a lopsided cushion to the sector.

Thirdly, the number of NBFCs and HFCs availing of this scheme shall be contingent on the rate and amount they receive as part of this scheme, which will be a determining factor of whether the scheme is a true liquidity potion or just another half-baked solution. 

Fourthly, the complexity of SPVs – often in the form of layers upon layers of securitized assets – can make it near impossible to monitor and track the level of risk involved and who it lies with.

In theory, SPVs are bankruptcy remote. However, there exists a moral hazard, not for the banks, but for the end investors who know that they have no financial obligation and therefore little incentive to investigate and monitor the credit quality of the underlying assets.

It could therefore be argued that neither party will have an incentive to scrutinize the SPV’s activities. This means that SPVs could be inefficient, both from a risk and from a regulatory perspective. On the other hand, if SPVs are completely separated from their sponsors, albeit with more intense scrutiny and regulation, the moral hazard from the point of view of the SPV investors would be removed.

In practice, however, it is not a credible threat that the sponsor will leave an SPV to collapse during difficult times. From a reputational perspective, it is not in the sponsor’s interests to abandon the SPV affiliated with its name and it will often make more sense to provide the financial support it needs in times of difficulty.

What remains to be examined is whether, in view of the risks underlying SPVs, the use of these vehicles should be stopped altogether?

The answer lies in the negation, as meticulous management of SPVs can bring it closer to its original motive of reducing financial risk. Firstly, investors must understand the structure and implications of their investments in SPVs, and so some standardization of documentation and disclosure requirements may be needed.

Secondly, constant review and monitoring of the risk levels of SPVs in relation to the remainder of the sponsor’s portfolio would increase the transparency around SPVs and prevent weaker assets from being moved into them for sale to investors. Finally, in the case of a sponsor having to support an SPV, the risks of the SPV should be absorbed into those of the sponsor.

Despite the inherent risks, SPVs are a stride in the right direction enabling large NBFCs and HFCs to obtain finances, transfer risks and perform other investment activities to maintain adequate liquidity levels, eliminate or mitigate systemic risks, augment the lending resources of NBFCs and HFCs, although for a short duration of three months.

In order to mitigate the gargantuan effects of the pandemic-induced depressionary forces on the shadow financing sector, the government must introduce a dark horse to soothe its long-term woes and not a mere quick fix.

Tags: inherent risks,inherent risk assessment, spv limited company, spv special purpose vehicle, spv in banking, spv finance, special purpose vehicles, spv investment, spv vehicle

National Education Policy 2020

The National Education Policy 2020 may provide a runway for the education sector to take off despite the challenges posed on account of the pandemic. The announcement of the NEP attracted criticism from industry experts, but it may place India on the global map as a sought-after educational haven of the world. The National Education Policy 2020 replaces the old education policy which was framed in 1986 and ushering in an era of new educational reforms.

This is the first policy that seeks to unshackle students from the tyranny of administrative constraints with multiple-choice, multidisciplinary learning, and multiple chances. However, the policy has been scrutinized and dissected by industry experts and thus has witnessed conflicting views.

The policy aims to create a robust digital infrastructure in the education sector that ensures uninterrupted learning even during unprecedented circumstances. The National Education Technology Forum (NETF) will be established for ensuring that the technology is integrated adequately and efficiently into the education process and to ensure the enhancement of access to education to all sections of the society even in these tumultuous times.

Various contours of this policy aim to radically improve the Gross Enrolment Ratio in higher education and to achieve the objective of 100% youth literacy. Moreover, the said policy has also been predicted to reduce the social and economic gap between students, which has magnified in wake of the pandemic.

A system that promotes meritocracy, equal opportunity and equity is good, but there lies a gap between theory and practice. In addition to this, the NEP elucidates the need for homeschooling and multi-language learning whereby until the 5th grade and in exceptional circumstances, no later than 8th grade, the model of education shall be in the mother tongue/local language of the student.

Despite the all-encompassing façade of the new policy, its success shall be put through a skeptical lens with rising concerns for the students during higher education and in their professional journeys. It is particularly problematic in light of the right of the people to move from one state to another since the inter-state movement shall result in the change of the local language and the mode of education.

The policy has also been criticized due to the legal complexities surrounding the applicability of two operative policies namely The Right to Education Act, 2009 and the New Education Policy, 2020. Certain provisions such as the age of starting schooling will need to be deliberated upon, in order to resolve any conundrum between the statute and the recently introduced policy in the longer run.

Against this backdrop, it is pertinent to note that past attempts at parliamentary legislation under the erstwhile regulatory setup have not been successful.

The failure can be attributed to the role of regulators and the intended legislative changes being out of alignment, as in the case of the Foreign Educational Institutions (Regulation of Entry and Operations) Bill, 2010, which lapsed; and the proposed Higher Education Commission of India (Repeal of University Grants Commission Act) Act, 2018 which remained did not reach the Parliament.

The contours of NEP are expected to revise the regulatory avatar of the Higher Education Commission of India (“HECI”) being set up with a wide role in Indian higher education. The HECI is likely to have four verticals under its umbrella, including

a) the National Higher Education Regulatory Council, intended to be a single point regulator for the higher education sector;

b) the National Accreditation Council, which will deal with the accreditation of institutions;

c) the Higher Education Grants Council, which will be tasked with carrying out funding and financing of higher education; and

d) General Education Council, the final vertical, is expected to have a more academic based-role, as it will frame expected learning outcomes for higher education programs. Foreign universities coming into the country will also fall under the purview of this framework.

While the Universities Grants Commission and the All India Council for Technical Education have played a major role in this direction until now, questions pertaining to the role of the UGC and AICTE remain unanswered under the new policy.

It is evident that NEP 2020 provides a fresh canvas to paint on and opens up avenues for home-schooling and foreign universities alike, in India. For the new policy to succeed a combination of a staunch intent to move out of comfortable doldrums and facilitate increased involvement of foreign universities and increased literacy levels is a must.

While this objective is expected to see a significant regulatory overhaul for its successful implementation, it would lay a successful path ahead for institutions as well as the student community and place India on the map as an educational haven.

Tags: national education policy 2020, national education policy, india education policy, education sector, new education system in india, nep criticism, new education policy 2020, new education policy, education policy 2020

Repayment Of AGR Dues

The COVID-19 pandemic has demonstrated the importance that telecommunications infrastructure plays in keeping businesses, societies, and governments, connected and functional. However, telecom companies have been laden in debt in recent years, and their network resiliency has been tested despite challenges posed by the current pandemic, propelling them further into the dark hole of debt.

Amongst the slew of challenges, the telecommunications sector was already grappling with the issue of payment of Adjusted Gross Revenue (AGR) when the pandemic hit the world. Recently, the Supreme Court reserved its order for deciding the deadline for the payment of Adjusted Gross Revenue (“AGR”) related dues of the telecom companies like Idea, Vodafone, and Bharti Airtel payable to the government.  

In particular, Vodafone Idea owes a mammoth Rs 58,254 crore out of which it has only been able to pay Rs 6854 crore, while Bharti Airtel is relatively in a better position than the former.

With respect to the issue of the appropriate timeline for the repayment of the AGR dues, the court refuted the suggestions by telecom companies of 15 to 20 years for repayment of their dues, on the grounds that 15-20 years was an unreasonably excessive amount of time considering the fact that telecom players have still been financially stable even during these tumultuous times.

In fact, it is believed that the telecom sector to a large extent has not been adversely affected and has been witnessing profits even during these times due to increased data usage resulting from work from home trends. This is particularly pertinent in the backdrop of the catastrophic financial impact emanating from the COVID-19 pandemic.

However, in consideration of the larger picture, huge repayment amounts and intense competition within the telecom sector can be detrimental to the survival of Vodafone Idea. If telecom companies are required to pay the AGR in full or without any deferment, it is bound to take a severe toll on the telecom’s financial wellbeing.

In the event of inadequate revenues and cash for payment of license fees, telecom companies may be forced to consider increasing debt to meet demand. However, given the current situation, lenders willing to extend financial assistance will be limited and the cost of borrowing may be higher as opposed to the pre-COVID era, creating a vicious cycle.

During these critical financial times, no bank would be ready to grant guarantees or loans for such a magnanimous amount, which essentially increases the plight of Vodafone Idea because of the fact that even to borrow loans from the banks, they would have to pay a significant amount of money upfront which could possibly push them to the brink of exiting the market.

The court’s concern was majorly attributable to the uncertainty associated with granting such an extended period and the possibility that Vodafone Idea might become insolvent in any case.

The rationale of the Supreme Court in relation to profits may be deemed accurate in part; however, there is no denying the fact that ghosts from the past still haunt the telecommunication sector in India, such as massive AGR repayment dues. Therefore, the changing customer preferences of higher data usage may fill up the Vodafone’s bags sooner than otherwise, and enable it to pay back to the government in light of the judgment delivered last year.

However, the overhang of AGR dues is likely to hurt Vodafone’s Idea, pushing it to the brink of insolvency, which may impact the competitiveness of the telecom market and ultimately leave monopolistic prowess in the hands of Reliance-Jio.

Therefore, while the Supreme Court makes a decision on the adequate timeline for the repayment of AGR dues, spectators can only hope that the repercussions of a potential exit by the major market players can be extraordinary, like the present times.

So it is imperative that the competition watchdog and government collectively provide regulatory relaxations to the telecom players within a reasonable time frame to mitigate deleterious consequences on the competitive dynamics of the industry!

Tags: adjusted gross revenue, network telecom, telecom companies, agr dues, national telecom, network resiliency, telecom operators

Digitization in Indian Judiciary

The spread of the influenza-like infection plummeted without an alert carrying the world to an extraordinary halt. One fine day, the boundaries overseeing our regular activities were redesigned exemplarily. The world wound up in a smooth situation, with an obscure infection that radiated in China’s Wuhan city arriving at most nations over the globe.

The administrations struggled to cope with the rising number of cases and deaths. As a measure, regions began enforcing lockdowns. India has been no special case for the continuous undertakings. By mid of March, the nation found itself in the clutches of the pandemic, and four months later, it finds itself at the no.3 spot for most cases as the figures inch closer to the 1.2 million mark.

Under the progressing improvements, with the announcement of the COVID-19 as a pandemic, the Indian legal executive ended up in a fix. At first, with the expanding fear of the spread of the infection in the nation, the activity of the courts in the country adopted the necessary preventive measures. There was a breaking point put on the section of lawyers alone in the court excepting disputants, except if called for by the court.

The premises were being disinfected, the temperature of all ingoing staff was being checked, and social removing was being rehearsed overwhelmingly. In any case, the declaration of the lockdown fundamentally implied that the courts must be closed in the wake of the rising contaminations. In the given situation, could equity be let to endure while the world was destined with the spread of an obstruct infection? Maybe not.

If the courts were to be shut uncertainly, sitting tight for standardization of the circumstance, the result presumably would have caused unrecoverable harm.

The courts would have been troubled over-limit prompting further overabundances and postponement during the time spent administering equity. The effect of such a shutdown would be grave on fundamentally two fronts, the criminal equity framework and matters identifying with life and individual freedom of people.

It is the obligation of the court to secure the privileges of the residents, in all the unstable circumstances may be. Remembering such cardinal contemplations, the conceivable way out to adjust the wellbeing worries just as proceed with the way toward apportioning equity was shown up by the shrewd salvage looked for from the ‘E-Courts Project’.

This denotes the beginning of another time throughout the entire existence of the Indian Judiciary. There was a significant update in the whole court structure with the procedures currently being done by video conferencing and the coming of the e-documenting system.

At a fundamental crossroads, the possibility of virtual courts should be commended as a hearty system concocted to moderate the obstructions got by the pandemic.

There are a few advantages of hearing by means of video conferencing including no prerequisite of physical nearness wherein parties do go miles to be available face to face under the steady gaze of courts and simultaneously, it will be cost and time viable for the gatherings’ point of view just as the legal executive.

Above all, this will decrease the carbon impression. Video conferencing ought to be made discretionary in all courts across the nation for a wide range of issues. Digitalization will lessen the humongous number of pendency of cases under the steady gaze of courts and will be a successful solution for deferred equity.

Openness is the center capacity of the conveyance of equity. The nature of settling in the court will not be of utility if equity can’t be gotten to by individuals in any case. Thus, the current emergency would be an extraordinary open door for the digitalization of Indian courts.

It can likewise help diminish a gigantic excess of cases under the steady gaze of the courts. In the present-day situation, there can be numerous troubles looked at in the down-to-earth ramifications of virtual courts.

Numerous individuals and disputants may confront trouble in exploring a digitalized equity framework that could be controlled by some pragmatic preparation.

Besides, it is a desperate need that the National Informatics Centre make a stage that incorporates highlights of video conferencing and e-recording to supplant the utilization of any outsider exclusive programming for the release of basic open capacities like mediation.

As it were, making a cutting-edge equity stage will be brimming with difficulties yet note that this is the initial move towards digitalization of the court framework in a progression of many.

Tags: indian judicial system, digitization and digitalization, digitization process, digitization, indian judiciary, the indian judiciary, india judicial system, modern judicial system in india

Business Resumes and Unemployment Drops

The transmission pace slowed down but did not really aid in the flattening of the curve as compared to other nations. Instead, a full-year economic contravention was observed as a direct decade leaving millions of people jobless. The unemployment rate peaked during this lockdown period, being the highest in the urban areas.

With the brunt of the lockdown becoming unaffordable, the government ordered the first phase of reopening the country while people strive to learn to live with the virus until the vaccine arrives. 

With the lifting of the lockdown, a new ray of hope was offered to witness a surprising strength in India’s labor market as the economic activities started reviving. Most of the offices, shops, and self-employment avenues reopened after much struggle. And, as a result, a lot of jobs were restored that were earlier lost. A sharp fall in the unemployment rate was also witnessed with a drastic improvement in the unemployment crisis.

A massive gain in employment in rural areas also caught attention recently.  Due to the lockdown and the chain of events, the vulnerable section of the society, especially the migrant laborers were deprived of their daily wages and were compelled to face economic deprivation.

As a result, a flock of migrant laborers moved from megacities to their villages. To provide some relief from the adversities, the government increased the allocation of MNEREGA funds for the rural workers. The sudden boost in MNREGA activities resulted in alleviating the unemployment stress.

However, this unemployment drop is mostly because of casual work and self-employment activities growth. Demand for work under the national rural employment schemes has gone up after the unlock. The formal sector is still facing unemployment and recovering completely from the COVID-19 pain will take a much longer time.

There is a rise in non-wage work. Workers who were earlier employed in wage employment have returned to their villages after facing hardships due to the lockdown.

In villages, these workers are now either in casual work or agricultural work. Recently, the Joint Action Committee (JAC) of the unemployed youth associations made a demand to the state government to fill around 2.5 lakh vacancies in the government sector.

The committee has also demanded that until these vacancies are filled up, the government should provide unemployment allowance to the youths who have registered with Telangana State Public Service Commission for jobs.

India is amongst the worst-hit countries facing two challenges right now, slowing down the transmission along with handling the worst economic crisis. A massive spike of cases is expected in July and it’s going to be hard over a couple of months. It is yet to see whether the unlock 1.0 and the resuming of business will prove to be a relief to the economy or a disaster to human life.

Tags: unemployment rate 2021, natural unemployment, natural rate of unemployment, employment rate, Business Resumes, unemployment rate 2020, national unemployment rate, unemployment drops, unemployment rate

China Cannot Be Sued for Coronavirus

The willful, negligent and unmindful attitude of the Chinese authorities has led to the catastrophe of COVID-19. While some consider the inaction and lackadaisical behavior of China coupled with suppression of information as “treason against humanity”, the possibility of maintaining a successful lawsuit against our neighbor has to be explored rigorously.

There have been a couple of instant suits filed against China, seeking compensation for the political opacity and lack of response by the Chinese authorities, which have caused humongous damage to human life and economies across the globe.

There have been charges alleging creation and release, accidental or otherwise, of the Novel Coronavirus and of unleashing biological warfare. In all probability, positive outcomes of such legal challenges are highly skeptical.

Undeniably, the Chinese authorities have deliberately chosen denial, have behaved irresponsibly throughout the saga, and deserve the condemnation of the entire world. The regime of transferring patently false information all this while has made things unnecessarily worse as we stand today.

Legal liability, however, is a disparate phenomenon. Here we need to realize, that the Government of China is protected by the ambient sovereign immunity, and misconduct, even if proved, will not be able to cater to sufficient grounds for a waiver of that indemnity.

Sovereign immunity is not just a judicial favor for foreign regimes. International treaties of shared understanding and reciprocity not allowing people to sue the country primarily guide it. The difficulty at this stage arises as the act of China, despite being in the nature of criminal negligence, fails to fall in the bracket of exception laid down by the international law to the immunity enjoyed by the States.

Rather, there is a specific bar upon the exercise or performance or the failure to exercise discretionary powers regardless of whether the discretion is being abused. Possibly, the reckless behavior of the Chinese Government is baked into the very idea of sovereign immunity.

The next leg of the argument revolves around the proposition that China did very little to stop the spread of the virus. Unfortunately, the thrust of the argument on legal principles is tremendously weak. Sovereign immunity does not work on benevolence but on reciprocity.

China has been rejecting all such allegations and is certain to junk every summons it receives, ultimately making the entire exercise a futile thing. The World Health Organisation’s (WHO’s) International Health Regulations, 2005 is being referred to in order to assert that China violated its international obligations.

Articles six and seven of the WHO regulations make timely notification and information-sharing obligatory in the country where an outbreak takes place. Consequently, China has been denying all such allegations, which in turn nullifies the violation as the legal liability could only be fixed if the country consents to it.

There is a very minor and primarily technical gateway to drag China to the International Court of Justice (ICJ) over the Coronavirus pandemic provided in the WHO’s Constitution. This provision does not require the consent of the defendant’s country.

A member country will have to establish or create a doubt that China deliberately withheld information from the WHO and the international community at large. Article 63 of the WHO’s Constitution provides the legal basis for this route.

Tort law generally rests on the proposition that people will take reasonable care if they know there is an inherent danger that could cause harm to others. Under sovereign immunity, the costs of misbehavior of the Government tend to lie where they fall.

The concept of international terror and henceforth laws to tackle it was conceptualized a few years back. However, the absence of robust legislation possibly will not entail any punishment for another country’s recklessness and the motive is apposite to be political.

Nevertheless, for the massive economic fallout, China cannot be allowed to go scot-free. Perhaps, world leaders have to work in mutiny to diplomatically pressurize China for causing the pandemic and the present situation. On the contrary, China has called the allegations xenophobic, which invalidates all possible actions undertaken as of now.

Further, the most difficult part of the regime is to prove the deliberate intention of China in causing all the trouble the world is in at present.

In a nutshell, China has a strong position to rescind all legal allegations brought against it by world players, including India. It is a very bleak proposition to contemplate that China will eventually compensate for the major fallout and global recession caused by its laxity and disregard for the state of affairs.

However, the legal remedy of filing lawsuits seems to be futile and superfluous without much possibility of any fruitful upshot and conclusion. Nevertheless, how good the sequel stands will be eventually proven, as and when the lawsuits already instituted, are heard by the judiciary, while the wise option would be to avoid any bulging aspiration to be accrued from the judicial reaction to the legal battle.

Tags: catastrophe of COVID, China cannot be sued for Coronavirus, catastrophe of COVID 19, treason against humanity