Print Friendly, PDF & Email
http://www.thehindu.com/todays-paper/tp-opinion/More-than-a-BIT-of-protectionism/article16802711.ece
 
  • Treaties play a critical role in protecting foreign investment by holding host states accountable for the exercise of their regulatory power through an indep
  • The narrative on BITs in India has oscillated from one extreme to the other. From 1994 to 2011, India signed 70-odd BITs tilted heavily in favour of investment protection against the host state’s regulatory power.
  • Instead of correcting this laissez-faire narrative by balancing investment protection and the state’s regulatory power, the pendulum has now swung to the other extreme.
  • recently adopted Indian model BIT tilts the balance towards the host state’s regulatory power by severely limiting the substantive and procedural protection to foreign investment.
  • India’s BIT loss to White Industries, an Australian investor, in 2011 and a slew of BIT cases slapped by many foreign corporations triggered this protectionist narrative.
  • recent loss in the Devas multimedia case under the India-Mauritius BIT, which arose on account of the cancellation of the Antrix-Devas deal, has strengthened this narrative.
  • Protection of foreign investment in India
    • Termination of BITs by India will not impact existing foreign investment in India because most Indian BITs contain survival clauses ensuring availability of treaty protection for existing investment even after the expiration of the treaty for the next 10 to 15 years.
    • India’s reluctance to be held accountable for its regulation under international law, thus forcing foreign investors to rely entirely on domestic laws and domestic courts to safeguard their interest.
    • This may not be an attractive proposition for foreign investors for two reasons. First, if domestic laws are changed suddenly to the detriment of foreign investors, like it happened in the case of Vodafone where Parliament retrospectively amended the Income Tax Act to overrule the Supreme Court’s decision in favour of Vodafone, it would leave the foreign investor without any remedy. Second,
    • the overstretched Indian judicial system does not inspire much confidence in foreign investors as a forum for speedy resolution of disputes.
    • The legal vacuum created would surely dampen investor sentiment, especially because there is far too much state interference in businesses in India that make the country a difficult place to do business.
    • India’s rank in World Bank’s ease of doing business is abysmal at 130 out of 190 nations.
    • When it comes to specific factors that are critical for foreign investors, such as enforcing contracts, India’s rank is even worse at 172.
  • Protection of Indian investment abroad
    • India’s overseas FDI has increased from less than $1 billion in 2000-01 to more than $21 billion in 2015-16.
    • Given the reciprocal nature of BITs, their termination followed by replacement with a protectionist treaty will also reduce the protection available to Indian companies abroad.

Why ‘cashless’ may be the new normal – OPINION – The Hindu
http://www.thehindu.com/todays-paper/tp-opinion/Why-%E2%80%98cashless%E2%80%99-may-be-the-new-normal/article16802703.ece

  • India is an economy where 90 per cent of all transactions are in cash.
  • due to the large informal sector, which employs 90 per cent of the workforce
  • India cannot become a cashless society unless its mammoth informal sector transitions to digital payments.
  • As it happens, cash is the most powerful instrument of financial inclusion. Anyone can access it directly, without depending on rent-seeking technological or financial intermediaries.
  • Once you have it, you could spend it whenever, wherever, and in whatever quantity you want to, without anyone being able to track you doing it. These are basic freedoms and rights that we take for granted.
  • Why cashless?
    • consider the likely outcomes of a cashless society
      • One immediate outcome of a cashless India would be a sharp rise in indirect taxes compliance.-Brutally enforcing a cashless payments system is perhaps the quickest means way to get there.
      • Apart from the state, another big beneficiary of a cashless India is finance capital.
      • At present, India’s low-income households access credit through informal systems — be it a pawn broker or employer or a relative with cash savings.
      • both the debt and the savings of the working classes constitute an enormous market that global finance has so far been unable to access.
      • Forcing them to shift to cashless payment platforms instantly formalises this world of informality.
      • The third beneficiary is the digital sector, which enjoys a complex but symbiotic relationship with finance capital. Digital payment apps and e-wallet companies have enjoyed record downloads and deposits post-November 8.
  • the cash-dependent informal sector, which has taken a hit, and will continue to do so unless and until they switch en masse to digital payment platforms —