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DAILY CURRENT AFFAIRS, 02 MARCH 2025

PRIVILEGE MOTION

 
 
 
1. Context
BJP MLC Pravin Darekar on Wednesday moved a breach of privilege motion notice against stand-up comedian Kunal Kamra and Shiv Sena (UBT) spokesperson Sushma Andhare in the Maharashtra Legislative Council, alleging disrespect towards Deputy Chief Minister Eknath Shinde and the legislature
 
2. What are parliamentary privileges?
 
Parliamentary privileges are special rights and immunities granted to members of a parliament and the institution itself, aimed at ensuring the effective functioning of the legislative body. These privileges are essential for allowing parliamentarians to perform their duties without undue interference. They are generally based on principles of independence, freedom of speech, and protection from legal liabilities related to their parliamentary functions.
Parliamentary privileges are rooted in historical traditions and legal precedents, often enshrined in a country’s constitution or statutes. They are designed to uphold the independence and effectiveness of the legislative process and ensure that members can perform their roles without undue interference or intimidation
 
Here are some key aspects of parliamentary privileges:
  • Members of Parliament (MPs) enjoy immunity from legal action for statements made during parliamentary debates or proceedings. This ensures that they can speak freely and express their views on various issues without fear of defamation lawsuits or other legal repercussions
  • MPs are generally protected from arrest and detention while attending parliamentary sessions or while traveling to and from Parliament, except in cases of serious criminal offenses. This privilege helps ensure that their legislative duties are not interrupted
  • Parliaments have the authority to regulate their own internal procedures and discipline their members. This includes the power to expel members, suspend them, or address issues of misconduct
  • MPs are typically exempt from serving on juries, as their parliamentary duties are considered more important and cannot be interrupted by jury service.
  • MPs have the right to access and request documents and information necessary for performing their legislative functions. This includes the ability to summon witnesses and demand documents as part of parliamentary inquiries
  • Any actions that obstruct or disrespect parliamentary proceedings can be deemed as contempt of Parliament. This includes offenses like refusing to answer questions or disrupting proceedings.
  • Parliamentary committees have the power to conduct inquiries, summon witnesses, and request documents relevant to their investigations. They also have the authority to take evidence under oath
3. What is a privilege motion?
 
A privilege motion is a formal request made by a member of a legislature, usually in the form of a motion or proposal, to address a breach of parliamentary privilege. Parliamentary privilege refers to the special rights and immunities granted to members of Parliament to ensure the smooth functioning of legislative duties. A privilege motion is used to bring to the attention of the House any action that is perceived to have violated these privileges
 
Key Aspects of Privilege motion:
 

  • Purpose: The primary purpose of a privilege motion is to address and rectify an alleged breach of parliamentary privilege. This could include instances where the rights or immunities of Parliament or its members are infringed upon.

  • Types of Breaches: Common breaches that may prompt a privilege motion include:

    • Contempt of Parliament: Actions that obstruct or disrespect parliamentary proceedings.
    • Misrepresentation: Providing false or misleading information to Parliament.
    • Interference: Any external interference in parliamentary affairs or attempts to influence the legislative process improperly.

  • Procedure:

    • Submission: A member raises a privilege motion in the House, typically during a designated period or in accordance with specific rules set by the parliamentary procedure.
    • Content: The motion should clearly outline the nature of the breach and the specifics of how parliamentary privileges were violated.
    • Debate and Decision: Once the motion is raised, it is usually debated by the members of the House. Depending on the outcome of the debate, the House may take action to address the breach, which could include issuing a reprimand, taking disciplinary action, or other measures deemed appropriate
 
4. What is the constitutional provision with regard to the privilege motion?
 
The constitutional provisions related to privilege motions are primarily found in the context of the Indian Parliament and its functioning. In India, the provisions regarding parliamentary privileges and the handling of privilege motions are not explicitly detailed in the Constitution but are governed by established parliamentary rules and practices. However, some aspects are implicitly covered by constitutional principles and legislative provisions.
 

Constitutional Framework

  • Article 105 (Privileges of Parliament and its Members): Article 105 of the Indian Constitution provides the basis for parliamentary privileges and the powers of both Houses of Parliament (the Lok Sabha and the Rajya Sabha). It states that:
    • Clause (1): Members of Parliament (MPs) have the freedom of speech in Parliament, and their speeches and writings cannot be questioned in any court of law. This ensures that MPs can speak freely during parliamentary sessions without fear of legal repercussions.
    • Clause (2): This clause provides that the privileges of the Parliament are not restricted by the Constitution but are determined by the rules of the House and customs. It includes the power to punish for contempt and the power to regulate its own proceedings.

Parliamentary Rules and Procedures

The specific procedures for raising and handling privilege motions are detailed in the rules of procedure of the respective Houses of Parliament:

  • Lok Sabha Rules: The rules governing privilege motions in the Lok Sabha (House of the People) are outlined in the "Rules of Procedure and Conduct of Business in the Lok Sabha". These rules detail the process for raising a privilege motion, including how it should be submitted, debated, and decided upon.

  • Rajya Sabha Rules: Similarly, the Rajya Sabha (Council of States) has its own set of rules and procedures, detailed in the "Rules of Procedure and Conduct of Business in the Rajya Sabha". These rules provide the framework for raising and addressing privilege motions in the Rajya Sabha.

Judicial Interpretation
  • Judicial Review: While parliamentary privileges are generally protected from judicial review, the Supreme Court of India has occasionally examined issues related to parliamentary privileges to ensure that they are not abused and that constitutional principles are upheld
 
5. What is the Privileges Committee of Parliament?
 
The Privileges Committee of Parliament is a key parliamentary body tasked with investigating and addressing issues related to breaches of parliamentary privilege. The committee plays a crucial role in maintaining the integrity of parliamentary proceedings and ensuring that the privileges of Parliament and its members are respected
 

Functions of the Privileges Committee

  • Investigating Complaints: The committee investigates allegations of breaches of parliamentary privilege, which can include issues like contempt of Parliament, misrepresentation, or interference with parliamentary proceedings.

  • Examining Evidence: The committee examines evidence related to the alleged breach, including testimonies, documents, and other relevant information.

  • Reporting Findings: After its investigation, the committee prepares a report detailing its findings and recommendations. This report is presented to the Parliament, and the recommendations may include disciplinary actions or other measures to address the breach.

  • Advising on Privilege Matters: The committee advises the Parliament on matters related to parliamentary privilege and may suggest changes to rules or procedures to prevent future breaches.

Composition

  • Lok Sabha (House of the People): In the Lok Sabha, the Privileges Committee typically consists of members from different political parties. The committee is chaired by a senior member, usually appointed by the Speaker of the Lok Sabha.

  • Rajya Sabha (Council of States): Similarly, the Rajya Sabha has its own Privileges Committee, with members from various parties and chaired by a member appointed by the Chairman of the Rajya Sabha.

Procedure

  • Raising a Matter: A breach of privilege may be raised by a member of Parliament, often in the form of a privilege motion. If the motion is accepted, the matter may be referred to the Privileges Committee for investigation.

  • Investigation: The committee conducts a thorough investigation into the matter, which may involve collecting evidence, hearing witnesses, and reviewing documents.

  • Report Submission: The committee submits its report to the Parliament, outlining its findings and recommendations. The Parliament then debates the report and decides on the course of action.

 
 
 
For Prelims:  Indian Polity
For Mains: GS-II:  Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these.
 
 
Source: Indianexpress
 

ANTI DUMPING DUTY

 
 
1. Context
 
India has imposed anti-dumping duty on five Chinese goods to protect domestic players from cheap imports from the neighbouring country.
 
2.What is anti dumping duty?
 

An anti-dumping duty (ADD) is a protectionist tariff imposed by a government on imported goods that are sold below their fair market value, a practice known as "dumping." Dumping occurs when a foreign company exports a product at a price lower than what it charges in its domestic market or below its production cost, potentially harming the importing country’s domestic industries. The duty aims to level the playing field by offsetting this price difference, protecting local businesses from unfair competition.

  • Legal Basis: Governed internationally by the World Trade Organization (WTO) under the Agreement on Implementation of Article VI of GATT 1994 (Anti-Dumping Agreement). It allows countries to impose ADD if dumping causes or threatens "material injury" to domestic industries.
  • Process:
    1. A domestic industry files a complaint.
    2. An investigation assesses dumping margins (export price vs. normal value), injury, and causality.
    3. If confirmed, the government imposes a duty, typically calculated as the difference between the export price and the "normal value" (domestic price or cost-plus-profit in the exporting country)
 
3. Countervailing duties
 

Countervailing duties (CVDs) are tariffs imposed by a government on imported goods to counteract subsidies provided by the exporting country’s government to its producers or exporters. These subsidies—such as tax breaks, grants, or low-interest loans—can artificially lower the price of exported goods, giving them an unfair advantage in the importing country’s market. CVDs aim to neutralize this advantage, protecting domestic industries from subsidized foreign competition.

  • Legal Basis: Governed by the World Trade Organization (WTO) under the Agreement on Subsidies and Countervailing Measures (SCM Agreement), part of GATT 1994. Countries can impose CVDs if subsidies cause or threaten "material injury" to their domestic industries.
  • Process:
    1. A domestic industry files a complaint with evidence of subsidies and injury.
    2. An investigation confirms the subsidy’s existence, calculates its value (subsidy margin), and assesses harm.
    3. If proven, a duty is levied, typically equal to the subsidy amount, to raise the import price to a fair level.
 
4. Differences between Anti Dumping and Countervailing duties
 
 
Aspect Countervailing Duties (CVDs) Anti-Dumping Duties (ADDs)
Purpose Counteract foreign government subsidies Counteract dumping by foreign companies
Target Government subsidies Private companies selling below fair value
Legal Basis WTO SCM Agreement WTO Anti-Dumping Agreement
Investigation Focus Subsidies and their impact Dumping and its impact
Calculation Based on subsidy amount Based on price difference
Example Solar panels subsidized by a foreign government Steel sold below home market price
 
 
5. World Trade Organisation (WTO)
 

The World Trade Organization (WTO) is an international body that regulates and facilitates global trade among its member nations. Established on January 1, 1995, under the Marrakesh Agreement, it succeeded the General Agreement on Tariffs and Trade (GATT), which began in 1948. Headquartered in Geneva, Switzerland, the WTO provides a framework for negotiating trade agreements, resolving disputes, and promoting free and fair trade. As of March 2025, it has 164 member countries, representing over 98% of global trade, with India as a founding member since 1995.

Key Functions of the WTO

  • The WTO oversees the implementation and operation of multilateral trade agreements negotiated by its member countries. These agreements cover goods, services, and intellectual property
  • The WTO serves as a platform for member countries to negotiate trade liberalization and resolve trade-related issues. Notable negotiations include the Doha Round, which focuses on development and reducing trade barriers
  • The WTO provides a structured process for resolving trade disputes between member countries. Its dispute settlement mechanism is binding and aims to ensure that trade rules are followed
  • The WTO conducts regular reviews of member countries' trade policies and practices to ensure transparency and adherence to global trade rules
  • The WTO provides support to developing and least-developed countries to help them integrate into the global trading system and comply with WTO rules
  • The WTO collaborates with organizations like the International Monetary Fund (IMF) and the World Bank to ensure coherence in global economic policy-making
 
 
For Prelims: World Trade Organisation (WTO), Anti Dumping duty
 
For Mains: GS III - Economy
 
 
Source: The Hindu
 
 

DELIMITATION EXERCISE

 
 
 
1. Context
 
 
Describing as “unclear and confusing” the promise of Union Home Minister Amit Shah that southern states will not lose a single seat in the Lok Sabha on a pro rata basis after delimitation, a Joint Action Committee for Fair Delimitation (JAC) led by Tamil Nadu Chief Minister MK Stalin passed a resolution demanding that the “freeze on Parliamentary constituencies based on 1971 Census Population should be extended by another 25 years”
 
 
2. About delimitation
  • Delimitation refers to the process of determining the number of seats and defining the boundaries of electoral constituencies for the Lok Sabha and Legislative Assemblies.
  • It also involves allocating seats specifically reserved for Scheduled Castes (SC) and Scheduled Tribes (ST) within these legislative bodies.
  • As outlined in Articles 82 and 170 of the Constitution, the allocation of seats in the Lok Sabha and State Legislative Assemblies, as well as the demarcation of constituencies, is subject to adjustment following each Census.
  • This delimitation process is overseen by a Delimitation Commission established by an act of Parliament.
  • Such redistricting exercises have historically occurred following the 1951, 1961, and 1971 Censuses.

3. Constitutional Requirements and Current Status
  • The constitutional requirement for democratic governance stipulates that the government should be elected by the people, with the principle of 'one citizen-one vote-one value' being paramount.
  • Historically, the number of seats in the Lok Sabha was determined based on population figures from the 1951, 1961, and 1971 Censuses, resulting in an average population per seat of 7.3 lahks, 8.4 lahks, and 10.1 lahks respectively.
  • However, since the 1971 Census, the number of seats has been frozen to incentivize population control measures, ensuring that states with higher population growth do not gain disproportionately higher representation.
  • This freeze was initially implemented through the 42nd Amendment Act until the year 2000 and extended by the 84th Amendment Act until 2026.
  • Consequently, seat allocation is based on the population figures from the 1971 Census, with adjustments slated to occur following the first Census after 2026.
  • Ordinarily, the delimitation process, including determining the number of seats, defining territorial constituency boundaries, and allocating reserved seats for Scheduled Castes (SC) and Scheduled Tribes (ST), would align with the Census of 2031, being the first Census post-2026.
  • However, with the postponement of the 2021 Census and the approach of the year 2026, discussions are underway regarding the impending delimitation exercise.

 

4. Issues Surrounding Delimitation

The freezing of seat numbers based on the 1971 Census aimed to incentivize population control measures. However, over the past five decades, population growth has been uneven across states, with states like Uttar Pradesh, Bihar, Madhya Pradesh, and Rajasthan experiencing greater increases compared to states like Kerala, Tamil Nadu, Karnataka, and Andhra Pradesh.

Options Under Discussion

Two main options are being debated regarding the revised delimitation exercise based on projected 2026 population figures:

  1. Maintain Existing Seats (543) Redistribution: Under this option, the existing 543 seats would be redistributed among states.
  2. Increase Seats to 848 with Proportionate Redistribution: This option involves increasing the total number of seats to 848, with proportional increases among states.

Potential Disadvantages

Regardless of the chosen option, it's evident that southern states, smaller northern states like Punjab, Himachal Pradesh, Uttarakhand, and northeastern states may be at a disadvantage compared to northern states such as Uttar Pradesh, Bihar, Madhya Pradesh, and Rajasthan. Such discrepancies may contradict the federal principles of the country and foster feelings of disenchantment among populations in states that stand to lose representation. Moreover, it contradicts the philosophy of freezing seats based on the 1971 Census, as states with better population control may lose political significance.

 

5. International Practices in Seat Allocation

  • In the United States, the number of seats in the House of Representatives, akin to India's Lok Sabha, has remained fixed at 435 since 1913. Despite the population increase from 9.4 crore in 1911 to an estimated 33.4 crore in 2023, the method of equal proportion is utilized to redistribute seats among states following each Census. This method aims to maintain fairness, ensuring that no significant gain or loss occurs for any state. For instance, after the 2020 Census, 37 states saw no change in their number of seats, while Texas gained two seats, five states gained one seat each, and seven states lost one seat each.
  • In the European Union Parliament, comprised of 720 members, seat allocation among its 27 member countries follows the principle of degressive proportionality. This principle entails that the ratio of population to the number of seats increases as population size increases. For example, Denmark, with a population of around 60 lahks, has 15 seats (with an average population of 4 lahks per member), while Germany, with a population of 8.3 crores, has 96 seats (with an average population of 8.6 lahks per member).

 

6. Proposed Ideal Solution

  • The dilemma between democratic and federal principles in delimitation can be effectively addressed by striking a balance that acknowledges the significance of both. A harmonious solution can be achieved by giving equal weight to democratic representation and federal structure.
  • The number of Members of Parliament (MPs) in the Lok Sabha could be capped at the current level of 543 seats. This ensures continuity in representation from various states, thereby upholding the federal principle. MPs primarily legislate on matters listed in the Union List, such as Defense, External Affairs, Railways, Telecommunication, and Taxation, and hold the Central government accountable.
  • To meet democratic representational requirements, the number of Members of the Legislative Assembly (MLAs) in each state can be increased in alignment with the current population. This adjustment can be made without altering the number of seats in the Rajya Sabha, thereby addressing the need for fair representation at the state level.
  • Crucially, to strengthen democracy at the grassroots level, empowering local bodies like panchayats and municipalities is imperative. These entities engage directly with citizens on a daily basis and play a vital role in governance. Significant devolution of powers and finances to these bodies is essential to enhance democracy at the grassroots level, ensuring effective citizen participation in decision-making processes.

 

7. The Way Forward

Finding a balanced approach to delimitation that considers democratic representation, federal stability, and local governance empowerment is crucial for India's future. This proposed solution offers a starting point for discussion and debate to ensure a fair and effective delimitation process that strengthens the nation's democracy.

 

For Prelims: Delimitation, Census, Covid-19 Pandemic, Article 82,  Article 170

For Mains: 

1. Critically analyze the potential conflict between the principle of "one citizen-one vote" and the freezing of Lok Sabha seats based on the 1971 Census in the context of delimitation. Discuss how this can impact federalism and representation in India. (250 Words)
2. How can the delimitation exercise be conducted in a manner that fosters national integration and strengthens the federal structure of India? (250 Words)
 
 
Previous Year Questions
 
1.  With reference to the Delimitation Commission, consider the following statements: (UPSC 2012)
1. The orders of the Delimitation Commission cannot be challenged in a Court of Law.
2. When the orders of the Delimitation Commission are laid before the Lok Sabha or State Legislative Assembly, they cannot effect any modifications in the orders.
Which of the statements given above is/are correct? 
A. 1 only             B. 2 only           C. Both 1 and 2               D. Neither 1 nor 2
 
2. Barak Valley in Assam is famous for which among the following? (MSTET 2019)
A.  Bamboo Industry
B. Petroleum Production
C. Cottage Industries
D. Tea Cultivation
 
3. Which one of the following is an important crop of the Barak Valley? (Karnataka Civil Police Constable 2019)
A. Sugarcane           B.  Jute            C. Tea                    D. Cotton
 
4. Consider the following statements: (UPSC 2021)
1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies. 3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct? 
A. 1 only           B.  2 only          C. 1 and 3             D. 2 and 3
 
 
5. The provisions in Fifth Schedule and Sixth Schedule in the Constitution of India are made in order to  (UPSC 2015) 
A. protect the interests of the Scheduled Tribes
B. determine  the boundaries between States
C. determine the powers, authority and responsibilities of Panchayats
D. protect the interests of all the border States
 
Answers: 1-C, 2-D, 3-B, 4-B, 5-A
Source: The Hindu
 
 

PREVENTION OF MONEY LAUNDERING ACT (PMLA)

1. Context

The Supreme Court said it would decide in April if its 2022 verdict upholding the Enforcement Directorate’s powers to arrest and attach property under the Prevention of Money Laundering Act (PMLA) needs reconsideration

2. Why is the PMLA verdict under review?

The PMLA verdict is under review because of several concerns raised by petitioners and legal experts about the constitutionality of the law and the extent of the powers granted to the Enforcement Directorate (ED).

Specific Concerns

  • The PMLA's retrospective application, allowing for the prosecution of offences committed before the law's enactment, has been challenged as violative of the fundamental right against ex post facto laws.
  • The PMLA places the burden of proof on the accused to establish innocence, a departure from the general principle of criminal law that presumes innocence until proven guilty.
  • Critics argue that the PMLA's provisions are overly broad and draconian, giving the ED excessive powers to arrest, detain, and seize assets without adequate judicial oversight.
  •  The PMLA's lack of adequate safeguards against arbitrary actions and misuse of power has raised concerns about the potential for abuse of authority by the ED.
  •  The PMLA's provisions have been criticized for potentially infringing upon fundamental rights such as the right to personal liberty, the right to property, and the right against self-incrimination.

3. Money laundering

  • Money laundering is the illegal process of making large amounts of money.
  • This money is generated by criminal activity but may appear to come from a legitimate source.
  • Criminal activities include drug trafficking, terrorist funding, illegal arms sales, smuggling, prostitution rings, insider trading, bribery and computer fraud schemes that produce large profits.

3.1. Different stages in money laundering

Generally, money laundering is a three-stage process:
  1. Placement: The crime money is injected into the formal financial system.
  2. Layering: Money injected into the system is layered and spread over various transactions and book-keeping tricks to hide the source of origin.
  3. Integration: Laundered money is withdrawn from the legitimate account to be used for criminal purposes. Now, Money enters the financial system in such a way that the original association with the crime is disassociated.  The money now can be used by the offender as legitimate money.
All three sources may not be involved in money laundering. Some stages could be combined or repeated many times.

3.2. Impact of Money Laundering on Economic Development

Money laundering can have a significant impact on economic development by:

  • When money laundering occurs, it can undermine public confidence in banks and other financial institutions. This can lead to increased risk aversion and a decline in investment, which can hamper economic growth.
  • Money laundering can distort economic activity by directing funds away from legitimate businesses and into criminal enterprises. This can lead to inefficient allocation of resources and slower economic growth.
  • Money laundering can facilitate corruption by providing a means to conceal the proceeds of corrupt activities. This can weaken governance and undermine the rule of law, further hindering economic development.
  • Money laundering can also lead to a loss of tax revenue, as criminals seek to evade taxes on their illicit gains. This can deprive governments of much-needed funds for essential services, such as education and healthcare.
  • Money laundering is often used to finance organized crime groups, which can lead to an increase in violence and instability.
  • Money laundering can also be used to finance terrorist activities, posing a serious threat to international security.
  • Money laundering can also have a direct impact on individuals and businesses, who may lose money or be victims of fraud as a result of this crime.

4. Prevention of Money-Laundering Act, 2002 (PMLA)

The Prevention of Money-Laundering Act, 2002 (PMLA) is a comprehensive legislation enacted by the Indian Parliament to combat money laundering and other financial crimes. It aims to prevent the use of proceeds of crime, particularly those derived from drug trafficking, organized crime and corruption, from being laundered and utilized to finance further criminal activities or to gain legitimacy.

4.1. Key Features of the PMLA

  • The PMLA prohibits the process of money laundering, defined as the act of concealing or disguising the proceeds of crime.
  • The PMLA empowers the Enforcement Directorate (ED), the designated agency for investigating money laundering cases, to attach and seize property derived from or involved in money laundering.
  • The PMLA provides for the confiscation of property that is involved in money laundering, even if it is not in the possession of the accused person.
  • The PMLA grants the ED extensive powers to conduct searches, make arrests, and detain individuals suspected of money laundering.
  • The PMLA facilitates international cooperation in combating money laundering through mutual legal assistance treaties and other mechanisms.

4.2. Significance of the PMLA

The PMLA has played a crucial role in strengthening India's anti-money laundering framework and enhancing its global standing in combating financial crimes. It has enabled the investigation and prosecution of numerous money laundering cases, leading to the recovery of substantial illicit funds.

4.3. Challenges in Implementing the PMLA

Despite its significance, the implementation of the PMLA has faced certain challenges, including:

  • The PMLA and other laws, such as the Narcotics Drugs and Psychotropic Substances Act, have overlapping jurisdictions, which can lead to confusion and delays in investigations.
  • There have been concerns about the lack of adequate safeguards against arbitrary actions and misuse of power under the PMLA.
  • The ED faces resource constraints in terms of manpower and infrastructure, which can hamper its ability to effectively investigate and prosecute money laundering cases.
 
5. About the Directorate of Enforcement 
 
  • The Directorate of Enforcement (ED) is an agency in India that primarily deals with the enforcement of economic laws and regulations to combat money laundering, foreign exchange violations, and financial fraud.
  • The ED is part of the Department of Revenue under the Ministry of Finance, Government of India.
  • The Directorate of Enforcement was established on 1st May 1956, as the "Enforcement Unit" within the Department of Economic Affairs.
  • Its primary focus was on preventing and detecting violations of the Foreign Exchange Regulation Act (FERA) of 1947.
  • Over the years, the agency's role expanded, and in 1999, the Enforcement Directorate was established as a separate entity under the Ministry of Finance.
  • The enactment of the Prevention of Money Laundering Act (PMLA) in 2002 further broadened its jurisdiction, giving it the power to investigate cases related to money laundering.
  • Since its establishment, the ED has played a crucial role in combating economic offences and ensuring compliance with economic laws in India.
  • It has been involved in several high-profile cases, including those related to financial scams, money laundering by influential individuals, and cross-border financial crimes.
  • The ED collaborates with various domestic and international agencies, including financial intelligence units, law enforcement agencies, and Interpol, to gather information, share intelligence, and effectively coordinate efforts to combat economic offences.

5.1. Functions and Roles of ED

  • Enforcing Economic Laws: The primary function of the ED is to enforce two key economic laws in India: the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA). It ensures compliance with these laws and investigates money laundering, foreign exchange violations, and economic fraud cases.
  • Money Laundering Investigations: The ED investigates cases involving money laundering, which is the process of concealing the origins of illegally obtained money to make it appear legitimate. It identifies and seizes properties and assets derived from illicit activities and prevents their further use.
  • Foreign Exchange Violations: The ED is responsible for investigating cases related to violations of foreign exchange laws and regulations. It monitors and controls foreign exchange transactions to maintain the stability of the Indian rupee and prevent illegal activities such as smuggling and illegal money transfers.
  • Financial Frauds: The ED also investigates and takes action against financial frauds, including bank frauds, Ponzi schemes, and other fraudulent activities affecting the Indian financial system. It works closely with other law enforcement agencies, such as the Central Bureau of Investigation (CBI), to tackle complex financial crimes.
 
For Prelims: Prevention of Money Laundering Act, ED, CBI, Foreign Exchange Management Act, 
For Mains: 
1. Critically evaluate the Prevention of Money Laundering Act, 2002 (PMLA) in its effectiveness in combating money laundering in India. (250 Words)
 
 
Previous Year Questions
 
1. Which one of the following is not correct in respect of Directorate of Enforcement? (CDS  2021)
A. It is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
B. It enforces the Foreign Exchange Management Act, 1999.
C. It enforces the Prevention of Money Laundering Act, 2002.
D. It enforces the Prohibition of Benami Property Transaction Act, 1988.
 
2. The Prevention of Money Laundering Act, 2002 become effective since which one of the following dates? (UKPSC RO/ARO 2012)
 
A. July 2002          B. August 2003        C. July 2004         D. July 2005
 
3. FEMA (Foreign Exchange Management Act) was finally implemented in the year (UPPSC  2013)
A. 1991         B. 1997         C. 2000             D. 2007
 
4. The Foreign Exchange Regulation Act was replaced by the ______ in India. (SSC Steno 2020) 
A. Foreign Exchange Currency Act
B. Foreign Exchange Finances Act
C. Foreign Exchange Funds Act
D. Foreign Exchange Management Act
 
5. "Central Bureau of Intelligence and Investigation" is listed in the __________ list given in the Seventh Schedule of the Constitution of India. (SSC CGL 2017) 
A. Union             B. State             C. Global          D. Concurrent
 
Answers: 1-D, 2-D, 3-C, 4-D, 5-A
 
Source: The Indian Express
 

FREE TRADE AGREEMENT 

1. Context

External Affairs Minister S. Jaishankar said on Wednesday that he was “cautiously optimistic” that the pace of the free trade agreement (FTA) talks with the U.K. would improve soon
 

2. About the Free Trade Agreement

  • A Free Trade Agreement (FTA) is an agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs, quotas, and subsidies.
  • FTAs can also include provisions on other issues, such as investment, intellectual property, and labour standards.
  • The goal of an FTA is to promote trade and economic growth between the signatory countries.
  • By reducing or eliminating trade barriers, FTAs can make it easier for businesses to export their goods and services to other countries, which can lead to increased production, employment, and innovation.

3. Types of Free Trade Agreement

  • Bilateral Free Trade Agreement (BFTA) involves two countries, aiming to promote trade and eliminate tariffs on goods and services between them.  It establishes a direct trade relationship, allowing for a more focused and tailored agreement between the two nations.
  • Multilateral Free Trade Agreement (MFTA) Involving three or more countries, an MFTA seeks to create a comprehensive trade bloc, promoting economic integration on a larger scale. It requires coordination among multiple parties, addressing diverse economic interests and fostering a broader regional economic landscape.
  • Regional Free Trade Agreement (RFTA) involves countries within a specific geographic region, aiming to enhance economic cooperation and integration within that particular area. It focuses on addressing regional economic challenges and fostering collaboration among neighbouring nations.
  • Preferential Trade Agreement (PTA) involves a reciprocal reduction of tariffs and trade barriers between participating countries, granting preferential treatment to each other's goods and services. It allows countries to enjoy trading advantages with specific partners while maintaining autonomy in their trade policies with non-participating nations.
  • Comprehensive Economic Partnership Agreement (CEPA) is a broad and advanced form of FTA that goes beyond traditional trade barriers, encompassing various economic aspects such as investment, intellectual property, and services. It aims for a more comprehensive economic partnership, encouraging deeper integration and collaboration between participating countries.
  • Customs Union While not strictly an FTA, a Customs Union involves the elimination of tariffs among member countries and the establishment of a common external tariff against non-member nations. It goes beyond standard FTAs by harmonizing external trade policies, creating a unified approach to trade with the rest of the world.
  • Free Trade Area (FTA) with Trade in Goods (TIG) and Trade in Services (TIS): Some FTAs specifically emphasize either trade in goods or trade in services, tailoring the agreement to the specific economic strengths and priorities of the participating countries. This approach allows nations to focus on areas where they have a comparative advantage, fostering specialization and efficiency.

4. India's Free Trade Agreements

India is a member of several free trade agreements (FTAs) and is currently negotiating others.  India's FTAs have helped to reduce trade barriers and promote trade and economic growth. They have also helped to attract foreign investment and create jobs. 

  • The South Asian Free Trade Agreement (SAFTA) was signed in 1995 by the seven countries of the South Asian Association for Regional Cooperation (SAARC). SAFTA aims to reduce or eliminate tariffs on trade between the member countries.
  • The India-Bangladesh FTA was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Sri Lanka FTA was signed in 1999 and came into force in 2000. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-ASEAN Free Trade Agreement was signed in 2002 and came into force in 2010. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Korea Comprehensive Economic Partnership Agreement (CEPA) was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Japan Comprehensive Economic Partnership Agreement(CEPA) was signed in 2022 and came into effect in 2023. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-UAE Comprehensive Partnership Agreement (CEPA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) was signed in 2010 and aims to enhance economic ties by addressing trade in goods and services, as well as investment and other areas of economic cooperation.
  • The India-Thailand Free Trade Agreement was signed in 2003 and focuses on reducing tariffs and promoting trade in goods and services between India and Thailand.
  • The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has been operational since 2005, this agreement covers trade in goods and services, as well as investment and intellectual property.
  • The India-Nepal Trade Treaty While not a comprehensive FTA, India and Nepal have a trade treaty that facilitates the exchange of goods between the two countries.
  • The India-Chile Preferential Trade Agreement was signed in 2006 and aims to enhance economic cooperation and reduce tariffs on certain products traded between India and Chile.

5.  India - UK Free Trade Agreement

5.1. Background

  • Both countries have agreed to avoid sensitive issues in the negotiations.
  • The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
  • By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
  • India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
  • While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.

5.2. GATT (General Agreement on Trade and Tariffs)

  • The exception to the rule is full-scale FTAs, subject to some conditions.
  • One rider, incorporated in Article XXIV.8 (b) of GATT, stipulates that a deal should aim to eliminate customs duties and other trade barriers on "Substantially all the trade" between the WTO member countries that are signatories to an FTA.
  • For this Agreement, a free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
  • It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
  • These agreements are not just about goods and services but also issues like investment.
  • If you are trying to weigh the costs and benefits, it is always better to have the larger picture in front of you.
  • In the case of the early harvest agreement inked with Thailand, automobile industry associations had complained that relaxations extended to Bangkok in the early harvest had reduced the incentive for Thailand to work towards a full FTA.
  • Early harvest agreements may serve the function of keeping trading partners interested as they promise some benefits without long delays, as India becomes known for long-drawn negotiations for FTAs.
  • Government emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
 
For Prelims: Free Trade Agreement, India-U.K, Bilateral Free Trade Agreement, G-20 Summit, Agenda 2030, Covid-19 Pandemic, SAARC, General Agreement on Trade and Tariffs, Comprehensive Economic Partnership Agreement, Multilateral Free Trade Agreement, Regional Free Trade Agreement, Preferential Trade Agreement, Customs Union, 
For Mains: 
1. Evaluate the potential impact of the India-UK FTA on the Indian economy, considering both positive and negative aspects (250 Words)
2. Critically evaluate the significance of Free Trade Agreements (FTAs) in promoting trade and economic growth, considering their potential benefits and drawbacks. (250 Words)
 
 
Previous Year Questions
 
1. Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018)
A. 1, 2, 4 and 5          B.  3, 4, 5 and 6      C.  1, 3, 4 and 5       D.  2, 3, 4 and 6
 
Answer: C
 

2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018)

(a) Industrial output fails to keep pace with agricultural output.
(b) Agricultural output fails to keep pace with industrial output.
(c) Poverty and unemployment increase.
(d) Imports grow faster than exports.

Answer: C

3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)

  1. Development of infrastructure facilities.
  2. Promotion of investment from foreign sources.
  3. Promotion of exports of services only.

Which of the above are the objectives of this Act?

(a) 1 and 2 only     (b) 3 only         (c) 2 and 3 only           (d) 1, 2 and 3

Answer: A

4. A “closed economy” is an economy in which (UPSC 2011)

(a) the money supply is fully controlled
(b) deficit financing takes place
(c) only exports take place
(d) neither exports nor imports take place

Answer: D

5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club.
2. It is an initiative to support Low Income Countries with unsustainable debt.
Which of the statements given above is/are correct?
(a) 1 only         (b) 2 only            (c) Both 1 and 2          (d) Neither 1 nor 2
Answer: C
 
 Source: The Hindu
 

SECOND-GENERATION NAVIC SATELLITE

 
 

1. Context 

The Indian Space Research Organisation (ISRO) on Wednesday morning launched its historic 100th mission — GSLV-F15 lifting off with a navigation satellite from the Satish Dhawan Space Centre in Sriharikota

2. Key Takeaways

  • Each of the seven satellites currently in the Indian Regional Navigation Satellite System (IRNSS) Constellation, operationally named NavIC, weighed much less around 1, 425 kg at liftoff.
  • They all rode the lighter Polar Satellite Launch Vehicle (PSLV), ISRO's workhorse launch rocket.
  • The last IRNSS Satellite, IRNSS-1I, was launched in April 2018 to replace an older, partially defunct satellite in the constellation.
  • IRNSS-1I was ISRO's ninth satellite for the NavIC constellation but is considered to be the eighth because the IRNSS-1H launched eight months earlier in August 2017 and originally intended to replace the older satellite was lost after the heat shield of the payload failed to open on time.
Image source: ISRO

3. About the second generation NavIC satellite

  • The second-generation satellite christened NVS-01, the first of ISRO's NVS series of payloads is heavier. Other than that:
    Atomic Clock: The satellite will have a Rubidium atomic clock onboard, a significant technology developed by India.
  • The Space-qualified Rubidium Atomic clock indigenously developed by Space Application Centre-Ahmedabad is an important technology which only a handful of countries possess.
  • L1 signals for better use in wearable devices: The Second-generation satellites will send signals in a third frequency, L1, besides the L5 and S frequency signals that the existing satellites provide, increasing interoperability with other satellite-based navigation systems.
  • The L1 frequency is among the most commonly used in the Global Positioning System (GPS) and will increase the use of the regional navigation system in wearable devices and personal trackers that use low-power, single-frequency chips.
  • Longer mission life:  The second-generation satellites will also have a longer mission life of more than 12 years. The existing satellites have a mission life of 10 years.

4. Significance of the atomic clock on board the NVS-01 payload

  • Several of the existing satellites stopped providing location data after their onboard atomic clocks failed this was the main reason for the launch of the replacement satellite in 2018.
  • Since a satellite-based positioning system determines the location of objects by accurately measuring the time it takes for a signal to travel to and back from it using the atomic clocks on board, the failure of clocks means the satellites are no longer able to provide accurate locations.
  • Currently, only four IRNSS satellites can provide location services, according to ISRO officials.
  • The other satellites can only be used for messaging services such as providing disaster warnings or potential fishing zone messages for fishermen.

5. The age of the satellites

  • This is the second major concern, besides the failing atomic clocks.
  • IRNSS-1A was launched into orbit on July 1, 2013, and the 1B and 1C satellites were launched the following year.
  • 1A is almost defunct- the failed 1H mission of 2018 was intended to replace this satellite and all the three oldest satellites in the constellation are close to the end of their 10-year mission lives.
  • At least three new satellites must be put into orbit to keep the seven-satellite constellation fully functional.

6. NAvIC constellation 

  • ISRO has been criticised by experts for not focussing on the development of the user segment until very late in the life of some of the satellites in the constellation.
  • No receivers were developed for the NavIC system, even though the satellites were sending signals.
    A 2018 report by the Comptroller and Auditor General (CAG) of India said that even though the Cabinet cleared funding of Rs 200 crores to develop user receivers in 2006, work on the project started only in March 2017, by which time seven launches had already taken place.
  • The receivers have now been developed and NavIC is in use for projects like public vehicle safety, power grid synchronisation, real-time train information systems and fishermen's safety.
  • Other upcoming initiatives such as common alert protocol-based emergency warning, time dissemination, geodetic network, and unmanned aerial vehicles are in the process of adopting the NavIC system.
  • Some cell phone chipsets such as the ones built by Qualcomm and Media Tek integrated NavIC receivers in 2019.
  • The Ministry of Electronics and IT is in talks with smartphone companies to urge them to make their handsets NavIC compatible.

7. Advantage of having a regional navigation system

  • India is the only country that has a regional satellite-based navigation system.
  • There are four global satellite-based navigation systems the American GPS, the Russian GLONASS (GLObalnaya NAvigatsionnnaya Sputnikovaya Sistema), the European Galileo and the Chinese Beidou.
  • Japan has a four-satellite system that can augment GPS signals over the country, similar to India's GAGAN (GPS Aided GEO Augmented Navigation).
  • Once fully operational with ground stations outside India for better triangulation of signals NavIC open signals will be accurate up to 5 meters and restricted signals will be even more accurate.
  • GPS signals by contrast are accurate up to around 20 meters. Work is underway to set up ground stations in Japan, France and Russia.
  • NavIC provides coverage over the Indian landmass and up to a radius of 1, 500 km around it.
  • In this region, NavIC signals will likely be available in even hard-to-reach areas.
  • Unlike GPS, NavIC uses satellites in high geo-stationery orbit the satellites move at a constant speed relative to Earth, so they are always looking over the same region on Earth.
  • NavIC signals come to India at a 90-degree angle, making it easier for them to reach devices located even in congested areas, dense forests or mountains.
  • GPS Signals are received over India at an angle.
  • With the use of NavIC picking up, the government has been looking at the possibility of increasing the coverage area of the system.
For Prelims: NavIC, Indian Space Research Organisation, GSLV, PSLV, IRNSS, GLONASS, GPS, GAGAN, Galileo, Beidou, 
For Mains: 
1.  What is NavIC? Explain the advantage of having a regional navigation system. (250 Words)
 
 
Previous Year Questions
 
1. With reference to the Indian Regional Navigation Satellite System (IRNSS), consider the following statements: (UPSC 2018)
1. IRNSS has three satellites in geostationary and four satellites in geosynchronous orbits.
2. IRNSS covers entire India and about 5500 sq. km beyond its borders.
3. India will have its own satellite navigation system with full global coverage by the middle of 2019.
Which of the statements given above is/are correct? 
A. 1 only     B. 1 and 2 only     C.  2 and 3 only        D. None
 
Answer: A
 
2. Full form of NavIC is : (CGPSC 2022) 
A. Navigation without International Control
B. Navigation with Indian Constellation
C. Navigation with Indian Coastal
D. Navigation with Indian Cooperation
 
Answer: B
 
3. ISRO is related to (SSC JE EE  2020) 
A. space research
B. agricultural research
C. seed research
D. marine research
 
Answer: A
 
4. With reference to India's satellite launch vehicles, consider the following statements:  (UPSC  2018) 
1. PSLVs launch the satellites useful for Earth resources monitoring whereas GSLVs are designed mainly to launch communication satellites.
2. Satellites launched by PSLV appear to remain permanently fixed in the same position in the sky, as viewed from a particular location on Earth.
3. GSLV Mk III is a four- staged launch vehicle with the first and third stages using solid rocket motors; and the second and fourth stages using liquid rocket engines.
Which of the statements given above is/are correct? 
A. 1 only                  B. 2 and 3             C. 1 and 2                    D.  3 only
 
Answer: A
 
5. In which of the following areas can GPS technology be used? (UPSC 2018)
1. Mobile phone operations
2. Banking operations
3. Controlling the power grids
Select the correct answer using the code given below:
A. 1 only    B. 2 and 3 only   C.  1 and 3 only      D.  1, 2 and 3
 
Answer: D
 
 Source: The Indian Express

 

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