Recently a Commerce Ministry task force submitted its recommendations on drafting of national e-commerce policy.
Why was the task force set?
The task force was set up by a 70-member think tank headed by the Minister for Commerce and Industry.
It was set to suggest a framework for the national policy on e-commerce.
With the task force’s recommendations in place, the think tank will now work on creating a draft policy.
It is the final draft of the think tank which will be taken up by the government.
What are the recent developments?
India’s e-commerce sector is currently estimated to be worth around $25 billion.
It is further expected to grow to $200 billion over the next 10 years.
Cheaper smartphones and data tariffs, and enhanced connectivity contribute to the growth prospects.
The bigger e-commerce firms have largely covered the metros and large cities.
As a next phase, they could move to tier-II and tier-III towns.
Expansion of 3G and 4G networks to these towns have put more consumers online.
Why do we need such a policy?
The e-commerce growth has led to job creation, productivity improvement, and increased online presence of consumers.
To benefit from these opportunities, it is essential to be responsive to the underlying challenges.
There is thus the need for clearly laid-down rules for electronic commerce in the country.
Many of these rules currently exist in some or the other form.
But they are enforced by a multiplicity of government departments and regulators.
Hence, a national e-commerce policy would consolidate the various norms and regulations to cover all online retailers.
What are the restraints?
India does not allow FDI in e-commerce companies that hold their own inventories/stocks [inventory-based model].
On the other hand, the government allows 100% FDI in the marketplace model.
Here, the marketplace operators cannot hold inventory (stocks) and sell products on their platform. They can only facilitate the online sale process for other vendors.
To name a few there is Amazon and foreign-funded companies in India including Flipkart, Shopclues and Snapdeal. These only provide platforms to other retailers and vendors by allowing them to list their products.
However, huge share of investments in e-commerce firms are coming from abroad.
So the e-tailers are setting up seller entities that sold foreign firms’ products on the platforms.
Eventually, in 2016, the government mandated that no platform should have more than 25% of its sales coming from a single seller.
Also, they are not allowed to directly or indirectly influence prices of products sold on their platforms.
With these restrictions, e-commerce companies have not been able to offer their in-house brands extensively.
There have been incidents of customers expressing dissatisfaction with products purchased online.
In some cases, bricks and soaps have been delivered instead of mobile phones. This is an inherent flaw of the marketplace model.
Because, market platforms do not have full control over the supply chain and only functions as a facilitator.
There are also complaints of prices being higher than the maximum retail price (MRP).
National Consumer Helpline of Consumer Affairs Ministry is currently the only redressal mechanism.
What are the key recommendations?
FDI may be allowed in inventory-based e-commerce companies up to 49% which comes with a condition that the e-tailer sells 100% Made-in-India products.
This will allow e-commerce firms to offer their own brands as long as they are made in India.
It is also suggested that foreign e-commerce websites be brought on a level playing field with their Indian counterparts.
For online marketplaces, restrictions would be imposed on group companies of such platforms.
The marketplaces will not be able to offer deep discounts through their in-house companies listed as sellers.
This is to prevent them from directly or indirectly influencing the prices of goods and services.
Bulk purchases of branded goods “by related party sellers which lead to price distortions in a marketplace” will be prohibited.
To provide a forum for consumers, the task force suggested a Central Consumer Protection Authority (CCPA).
This, besides helping consumers, will act as the nodal agency for intra-government coordination.
It will thus provide a platform for e-commerce operators regarding complaints of fraudulent activities.
The draft suggests a separate wing to be set up in the Enforcement Directorate.
This will handle grievances related to guidelines for foreign investment in ecommerce.
Currently, a large number of payments for online purchases is made through the cash-on-delivery option.
To make online payments safer, the task force has suggested creating a fraud intelligence mechanism.
This would use artificial intelligence-based authentication systems, for early detection of frauds.
Greater regulatory scrutiny has been recommended for mergers and acquisitions that may distort competition.
A relook has been suggested on what constitutes entry barriers and anti-competitive practices.
The Competition Commission of India has been asked to undertake such exercises.
This assumes significance in the light of the recent acquisition of Flipkart by US retail major Walmart.
The policy also suggests a sunset clause for deep discounting wherein a “maximum duration” would be set for “differential pricing strategies”.
What are the implications?
If implemented, it could impact consumers’ online shopping experience in multiple ways.
They include how discounts are given, the availability of newer products, and the redressal of complaints.
E-commerce platforms would have to mandatorily provide the government’s RuPay payment option.
Suggestion for creation of a single national regulator to oversee the entire industry requires action from multiple ministries and regulators.
Also, there is need for amendments to existing legislation and rulebooks.
Report on Varieties of Democracy-2018
GS Mains Paper-2, Polity
Why in news?
Recently University of Gothenburg (Sweden) has published the “Varieties of Democracy Report” (V-Dem) for 2018.
The report provides the most sweeping global examination of democracy, and India has seen a downgrade in its overall status.
What does the report cover?
The Report covers 178 countries, crunches a large number of indicators, and adds a deep historical perspective.
It is carried out rigorously, with a global team of 3,000 researchers with deep knowledge of local political contexts.
It’s also backed by the European Union (EU) and funded by a multitude of different institutions and think tanks, ensuring a robust access to data.
The methodology involves classifying nations on a combination of variables and then checking for changes in overall democratic status.
The survey also does a comparison over 2007-2017 on multiple indicators.
There are various categories for classification in the report. They are as follows:-
This category is the ideal benchmark, and every citizen in such societies is guaranteed equal rights and full freedom of expression.
Further, equitable access to the law, institutionalized justice system, freedom of association, participatory elections etc., are other important metrics in this category.
Only 39 of the 178 nations that were studied met these standards in 2017.
In this category, all citizens have the right to vote but certain categories of people suffer exclusion due to their socio-economic status.
Further, lower standards (as compared to liberal democracies) apply here, when it comes to human rights, freedom of expression and association, etc.
In 2017, the V-Dem reckons 56 countries qualified for this category.
In this category of nations, all citizens have the vote but repression, censorship and institutionalized intimidation are very visible.
According to the study in this domain there were 56 nations in 2017.
While electoral Autocracy have severe problems they are still better off than countries that are classified as closed autocracies.
In a closed autocracy, the political executive is totally free of being answerable to its people, and their rule is carried out with fear and intimidation.
Notably, for residents of “Closed Autocracies”, not being subjected to political persecution is a common big dream that many of them chase.
Worldwide, there were 27 such “closed autocracy nations” in 2017.
In which category does India’s fall as per the reports classification?
India saw a slide in its ranking over the years as the quality of democracy has noticeably declined over the past decade (especially after 2014).
The study notes that infringements on media freedom and the civil society activities have spiked since the “Hindu-nationalist government” took office.
Nonetheless, India retains a system of free & fair multi-party elections and thus, qualifies as an electoral democracy.
But it has seen major erosion in indicators such as Freedom of Expression, Rule of Law and Freedom of Association.
The future remains uncertain, as India could get better from here, or slip further down to a situation akin to the emergency era (1975-77).
Why can there be a situation akin to the emergency era (1975 -1977)?
Censorship of the media and harassment of journalists can occur gradually through “inducements, intimidations, and co-optation”.
These tactics would further lead naturally to increasing levels of self-censorship and fewer explicit criticisms of the government.
The predictable result is a narrower range of political perspectives in the public sphere, as well as a general decline in the freedom of expression.
Only the “Voter’s Registry” has improved over the past 10 years and other parameters have either stagnated, or deteriorated.
This includes harassment of media, curtailment of NGOs and repression of cultural and academic expression, etc.
Even in terms of electoral transparency, the study says that intimidation and violence have increased and that party agents harass and bribe voters.
The murder and jailing of environmental and human rights activists and attempts to shut down alternate means of free expression have also increased.
Further, rapidly worsening “Gini coefficient” (increasing economic inequality) is another worrying indicator for sustaining democracy.
Accelerated Promotion With Consequential Seniority For SC/ST In Public Employment
GS Mains Paper-1,2
Government Schemes and Policies, Polity, Judiciary
Why in news?
Recently the Centre told the Supreme Court that all SC/ST employees must get reservation in promotions.
The case is in relation to a 2006 Supreme Court verdict in M Nagaraj vs. Union of India case.
What was the 2006 verdict about?
In the 2006 verdict the SC had ruled that reservation in promotion of government servants was not mandatory for the state.
However, if the state wanted to exercise its discretion, they were free to do so.
The government can introduce a quota in promotion for its SC/ST employees only if they prove
that the particular Dalit community is backward
it was inadequately represented
such a reservation would not affect the overall efficiency of public administration
The opinion of the government should also be based on quantifiable data.
Hence, backwardness, inadequacy and administrative efficiency were “compelling reasons” for reservation.
But despite these, the state will have to ensure that its reservation provision does not lead to excessiveness.
This means that the state cannot breach the ceiling limit of 50% or eliminate the creamy layer or extend reservation indefinitely.
The judgement excluded the ‘creamy layer’ in SC/ST reservation during promotion.
The judgment said the three qualifiers were meant to prevent “reverse discrimination” by State.
However, the judgement was contested by the Centre and the constitution bench is now hearing it.
What were the concerns?
The Centre said the provision has led to a deprivation of the Dalit communities.
The government also objected to the creamy layer concept among the SC/ST as it was becoming a hindrance.
Besides, getting quantifiable data for “inadequate representation” had many procedural limitations.
Also, the elaborate exercise is leading to a large number of posts lying vacant.
The SC/ST communities have already faced centuries of deprivation at the hands of society.
They have been deprived of access to temples, schools and the basic facilities of life as they are “presumed backward”.
What does the Centre demand?
The Centre highlights the need to show “affirmative action” by giving SC/STs equality of opportunity.
It pushes for providing “accelerated promotion with consequential seniority” for SC/ST members in public employment.
“Consequential seniority” is when an SC/ST employee is promoted purely on reservation basis despite another person waiting for promotion is actually senior to him/her.
The Centre wanted a total of 22.5% (15% for SC+7.5% for ST) posts reserved for promotion for SC/ST in public employment.
The Tussle Between Centre & Collegium Regarding Appointment Of Supreme Court Judge
GS Mains Paper-2, Judiciary, Polity
Why in news?
The Union government recently cleared the elevation of Justice K.M. Joseph to the Supreme Court.
Appointment of a Supreme Court judge:-
The Chief Justice of India and the Judges of the Supreme Court are appointed by the President under clause (2) of Article 124 of the Constitution.
Whenever a vacancy is expected to arise in the office of a Judge of the Supreme Court, the Chief Justice of India will initiate proposal.
The recommendation will be forwarded to the Union Minister of Law, Justice and Company Affairs to fill up the vacancy.
The opinion of the Chief Justice of India for appointment of a Judge of the Supreme Court should be formed in consultation with a collegium of the four senior-most Judges of the Supreme Court.
Appointment of K.M Joseph:-
M Joseph was the chief justice of Uttarakhand high court.
The five member collegium earlier recommended K.M Joseph for elevation to the SC, and it was reiterated again.
Union government has made unusual delay in first responding to the Collegium’s recommendation, and later it took more time for reconsideration of the proposal.
This had created stand-offs between judiciary and executive, and within the judiciary.
The concerns with the Government’s move:-
Union government explained the delay was due to invocation of the seniority or diversity norms in appointments to the higher judiciary.
It made an issue of K.M. Joseph’s relative lack of seniority among the Chief Justices of the various high courts.
It also said that his elevation would give excessive representation to Kerala, as he belongs to the state.
Union government has been splitting recommended lists and selectively approving proposals from the collegium, while holding back or returning some names.
Even in its adherence to the norm that reiteration of a recommendation is binding, the government has not been consistent.
What is the way forward?
The Centre had no option but to elevate the Uttarakhand High Court Chief Justice once the collegium reiterated its original recommendation after the Law Ministry returned his name.
But it will require more outreach by the government to assuage the anxieties expressed by senior judges in letters written to the CJI.
Given this past turbulence, the government will be watched carefully for the role it plays or doesn’t play in the future in the next big transition in the Supreme Court.