Current affairs- June 28, 2016

22nd meeting of Eastern Zonal Council

The Union Home Minister Rajnath Singh recently chaired the 22nd meeting of the Eastern Zonal Council held at Ranchi, Jharkhand.

• The Council discussed the issues like modernisation of State Police Forces, measures to curb communal tension and Left Wing Extremism (LWE), curbing of drug trafficking, measures for bringing Green Revolution to Eastern India, issues relating to fisheries, productivity of livestock and poultry to usher Blue Revolution.
• The issues of sharing of water of major rivers, development of Railways, construction of Dedicated Freight Corridor (DFC) and Multi –Sectoral Development Programme in the Eastern Zone were also discussed in detail.
• The Zonal Council also reviewed the progress of the implementation of the recommendations made at the previous meeting of the Council held at Patna last year.

Zonal councils:

Zonal councils have been established by the Parliament to promote interstate cooperation and coordination. They are statutory bodies established under the States Reorganisation Act 1956 and not constitutional bodies. They are only deliberative and advisory bodies.

There are 5 five Zonal councils namely:

• The Northern Zonal Council, comprising the States of Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, National Capital Territory of Delhi and Union Territory of Chandigarh.
• The Central Zonal Council, comprising the States of Chhattisgarh, Uttarakhand, Uttar Pradesh and Madhya Pradesh.
• The Eastern Zonal Council, comprising the States of Bihar, Jharkhand, Orissa, and West Bengal.
• The Western Zonal Council, comprising the States of Goa, Gujarat, Maharashtra and the Union Territories of Daman & Diu and Dadra & Nagar Haveli.
• The Southern Zonal Council, comprising the States of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and the Union Territory of Puducherry.

The North Eastern States i.e. (i) Assam (ii) Arunachal Pradesh (iii) Manipur (iv) Tripura (v) Mizoram (vi) Meghalaya (vii) Sikkim and (viii) Nagaland are not included in the Zonal Councils and their special problems are looked after by the North Eastern Council, set up under the North Eastern Council Act, 1972.

Composition:

• Chairman – The Union Home Minister is the Chairman of each of these Councils.
• Vice Chairman – The Chief Ministers of the States included in each zone act as Vice-Chairman of the Zonal Council for that zone by rotation, each holding office for a period of one year at a time.
• Members- Chief Minister and two other Ministers as nominated by the Governor from each of the States and two members from Union Territories included in the zone.
• Advisers- One person nominated by the Planning Commission (which has been replaced by NITI Ayog now) for each of the Zonal Councils, Chief Secretaries and another officer/Development Commissioner nominated by each of the States included in the Zone.
• Union Ministers are also invited to participate in the meetings of Zonal Councils depending upon necessity.

The main objectives of setting up of Zonal Councils are:

• Bringing out national integration.
• Arresting the growth of acute State consciousness, regionalism, linguism and particularistic tendencies.
• Enabling the Centre and the States to co-operate and exchange ideas and experiences.
• Establishing a climate of co-operation amongst the States for successful and speedy execution of development projects.

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Centre notifies amended RBI Act to usher in MPC

The government has moved to give statutory backing to the monetary policy committee (MPC). In this regard, the centre has notified the changes made to the Reserve Bank of India (RBI) Act.

• This paves the way for a resetting of the monetary policy framework that will shift the responsibility of maintaining inflation targets on a six-member panel, with the Reserve Bank of India (RBI) governor getting a casting vote in case of a tie.
• According to the monetary policy framework, agreed by RBI and the government last year, the central bank will look to contain inflation within a band of 4% plus/minus 2 percentage points from next year.

Background:

The idea of setting up an MPC was mooted by an RBI-appointed committee led by deputy governor Urjit Patel in February 2014 though that committee had recommended a five-member committee where three members would be from RBI and two external members would be appointed by the RBI governor and the deputy governor in-charge.

MPC:

It is a six member panel which will have the responsibility of maintaining inflation targets. The MPC will set interest rates to keep retail inflation within targets. Inflation targets will be set once every five years.

• The Committee is to meet four times a year and make public its decisions following each meeting.

Composition:

• The committee will have six members. Of the six members, the government will nominate three. The RBI Governor will chair the committee. The governor, however, will not enjoy a veto power to overrule the other panel members, but will have a casting vote in case of a tie. No government official will be nominated to the MPC.
• The other three members would be from the RBI with the governor being the ex-officio chairperson. Deputy governor of RBI in charge of the monetary policy will be a member, as also an executive director of the central bank. Decisions will be taken by majority vote with each member having a vote.
• The government nominees to the MPC will be selected by a Search-cum-Selection Committee under Cabinet Secretary with RBI Governor and Economic Affairs Secretary and three experts in the field of economics or banking or finance or monetary policy as its members.
• Members of the MPC will be appointed for a period of four years and shall not be eligible for reappointment.

Other details:

As per rules, no member of MPC should have any financial or other interest that prejudicially affects his functions as a member. Also, it will be considered that the panel failed in achieving the inflation target if the lower or the upper range of the target is breached for three consecutive quarters.

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U.S. wants progress in investment pact talks with India: Envoy

Expressing concern over ‘on-again, off-again’ progress in Bilateral Investment Treaty with India, the US has said “things have become a bit more difficult” after the model draft proposed by the Indian side.

• The US has expressed concerns over departures from the high standards in the recent model draft BIT which India negotiated with countries like South Korea and Japan.
• As alleged by the US, the new model substantially narrows the scope of investments covered by the treaty as it requires that disputes be exhausted in local Indian jurisdictions before alternative investor-state dispute mechanisms can be initiated.
• The objective of BITs is protection of the interests of investors but in the process these pacts aim to balance the obligations of the respective governments and the rights of investors.

Background:

The first round negotiations on the India-U.S. BIT was held in August 2009. However, the negotiations were initially delayed as India and the U.S. had undertaken a review of their respective model BIT texts.

Investors from developed countries including the U.S. have been citing ‘judicial delays’ in India to demand that they be granted the flexibility in the BITs to take disputes to international arbitration tribunals without waiting to exhaust remedies available in India.

About BIT:

The Union Cabinet, in December 2015, gave its approval for the revised Model Text for the Indian Bilateral Investment Treaty. The revised Indian model text for Bilateral Investment Treaty (BIT) will replace the existing Indian Model BIT.

Revised Bilateral Investment Treaty (BIT) text:

• It will be used for re-negotiation of existing BITs and negotiation of future BITs and investment chapters in Comprehensive Economic Cooperation Agreements (CECAs)/ Comprehensive Economic Partnership Agreements (CEPAs) / Free Trade Agreements (FTAs).
• It will provide appropriate protection to foreign investors in India and Indian investors in the foreign country, in the light of relevant international precedents and practices, while maintaining a balance between the investor’s rights and the Government obligations.

Significance of Bilateral Investment Treaty (BIT):

• A BIT increases the comfort level and boosts the confidence of investors by assuring a level playing field and non-discrimination in all matters while providing for an independent forum for dispute settlement by arbitration.
• BITs help project India as a preferred foreign direct investment (FDI) destination as well as protect outbound Indian FDI.

Features of BIT:

The essential features of the model BIT include an “enterprise” based definition of investment, non-discriminatory treatment through due process, national treatment, protections against expropriation, a refined Investor State Dispute Settlement (ISDS) provision requiring investors to exhaust local remedies before commencing international arbitration, and limiting the power of the tribunal to awarding monetary compensation alone. The model excludes matters such as government procurement, taxation, subsidies, compulsory licenses and national security to preserve the regulatory authority for the Government.

Background:

The first BIT was signed by India on March 14, 1994. Since then, till date, the Government of India has signed BITs with 83 countries. These BITs were largely negotiated on the basis of the Indian Model BIT of 1993.

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Prices of 45 essential drugs slashed

The National Pharmaceutical Pricing Authority has fixed the prices of 45 drug formulations, including three insulin formulations. NPPA has fixed/revised ceiling prices of 45 scheduled formulations of Schedule-I under Drugs (Price Control) Amendment Order, 2016, and retail price of 12 formulations under DPCO, 2013.

• NPPA has also directed all manufacturers to comply with the ceiling prices of the medicines and reduce prices, if the retail prices were higher than the revised amount, and maintain the prices, if they are lower than the set standard.
• The manufacturers not complying with the ceiling price and notes specified hereinabove shall be liable to deposit the overcharged amount along with interest thereon under the provisions of the Drugs (Price Control) Order, 2013, read with Essential Commodities Act, 1955.

Background:

The NPPA periodically revises prices of essential medicines under the Drug (Pricing Control) Order (DPCO) that has about 650 formulations under it. These prices can be increased by companies by a maximum of 10% depending on inflation.

National Pharmaceutical Pricing Authority (NPPA)

NPPA is an organization of the Government of India which was established, inter alia, to fix/ revise the prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995.

• The organization is also entrusted with the task of recovering amounts overcharged by manufacturers for the controlled drugs from the consumers. It also monitors the prices of decontrolled drugs in order to keep them at reasonable levels.

Functions of National Pharmaceutical Pricing Authority:

• To implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it.
• To deal with all legal matters arising out of the decisions of the Authority.
• To monitor the availability of drugs, identify shortages, if any, and to take remedial steps.
• To collect/ maintain data on production, exports and imports, market share of individual companies, profitability of companies etc, for bulk drugs and formulations.
• To undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.
• To recruit/ appoint the officers and other staff members of the Authority, as per rules and procedures laid down by the Government.
• To render advice to the Central Government on changes/ revisions in the drug policy.
• To render assistance to the Central Government in the parliamentary matters relating to the drug pricing.