Whatsapp 93125-11015 For Details
Editorial
Although the World Trade Organization (WTO) is in a moribund condition, there is prolific activity taking place in one area of rule-making: investment facilitation agreement (IFA).
Backed by more than 100 countries (it does not include India), the proposed IFA is meant to create legally binding provisions aimed at facilitating investment flows.
The legal obligations inter alia will require states to augment regulatory transparency and predictability of investment measures.
This agreement will be very different from investment protection agreements such as bilateral investment treaties (BITs) that allow foreign investors to bring claims against the host state for alleged treaty breaches. This is known as investor-state dispute settlement (ISDS).
Presumably, one of the reasons India is not a party to IFA negotiations is the apprehension that foreign investors could use a future IFA to bring claims under the existing BITs.
Anwar Shaik, India’s Counsellor at the WTO, has flagged this concern. Arguably, foreign investors may use the most favoured nation (MFN) provision in BITs to borrow or import stipulations from the IFA perceived to be more advantageous than those given in the underlying BIT.
Likewise, the foreign investor may use the ubiquitous provision of fair and equitable treatment (FET) present in BITs to challenge non-compliance with IFA.
Older investment treaties rarely elucidate the meaning of the FET provision, which, in turn, allows ISDS tribunals to supply its normative content.
Tribunals have held that the FET provision includes investors’ legitimate expectations. Debatably, the foreign investor may argue that the commitments undertaken by a state under the IFA create ‘legitimate expectations’ of the investor.
Another entry point for the provisions of the IFA into the ISDS mechanism can be the so-called ‘umbrella clause’ — a BIT clause that allows contractual and other commitments owed to a foreign investor to be brought under the treaty’s protective umbrella.
However, these are mere presumptions. Even if a foreign investor brings such claims, the ISDS arbitration tribunal is unlikely to agree with the investor for the following reasons.
First, as George Bermann and others argue, many BITs exempt an economic integration agreement from the application of MFN. Thus, the possibility of foreign investors successfully importing IFA provisions into the BIT is remote.
Pause and effect (Page no. 6)
(GS Paper 3, Economy)
The Reserve Bank of India’s Monetary Policy Committee (MPC) has unanimously and wisely decided to apply a temporary pause to its inflation-battling monetary tightening by keeping the repo rate unchanged.
RBI Governor Shaktikanta Das was emphatic in stressing that the decision to pause was “for this meeting only”, underlining the commitment to ensuring that retail inflation is progressively aligned to the mandated target of 4%.
Clearly, developments in the global financial system, particularly the banking sector turmoil and the volatility and uncertainty they have triggered, have weighed heavily on policymakers’ decision to wait and watch.
Notwithstanding his assertions that India’s ‘banking and non-banking financial service sectors remain healthy and economic activity remains resilient’, it is the spectre of rising credit costs posing risks to both consumption demand and private investment that was a key factor in the World Bank’s calculus earlier this week, when it cut India’s 2023-24 growth forecast to 6.3%.
With the global economy still facing headwinds including from unabated geopolitical tensions, which the World Bank warned could result in a recession were more shocks to occur, the RBI’s policymakers have judiciously chosen to subordinate their concerns over inflation, for now, so as to ensure the growth momentum is not undermined.
Still, monetary authorities have only a small window in which to see if their prognostication of a moderation in inflation is indeed starting to pan out.
With Mr. Das acknowledging that core inflation remains elevated across a range of goods and services and unyielding, the MPC faces a challenge in its mandate of achieving durable disinflation.
As the RBI’s latest Monetary Policy Report notes, upside risks to the inflation outlook emanate from factors including higher global crude and commodity prices and extreme weather conditions and deficient monsoon rains.
Already, as Mr. Das acknowledged, the sudden recent announcement of an output cut by OPEC+ producers had resulted in a jump in crude prices, which could well upset the RBI’s assumption of crude averaging $85 a barrel (for the Indian basket) this year.
Similarly, the outlook for food prices too is beset with uncertainty given the unseasonal rains in parts of the country combined with the likelihood of an El Niño, which could raise summer temperatures and depress monsoon rainfall.
Additionally, the RBI sees milk prices staying firm over the coming months amid fodder cost pressures. Policymakers must remember, as the RBI chief so pithily said, price stability still remains “the best guarantee for sustainable growth”.
News
Himachal considering legalising cultivation of cannabis, says CM (Page no. 9)
(GS Paper 2, Health/Governance)
Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu said the State government was considering legalising the cultivation of cannabis.
It (cannabis cultivation) would play a significant role in generating revenue for the State. Besides, it would be beneficial to patients as it has many medicinal properties. It can be used for industrial purposes as well,” Mr. Sukhu said in Shimla.
The Chief Minister said the State government was cautious about the potential increase in drug use and had formed a five-member committee of MLAs.
The committee will conduct a thorough study about each and every aspect related to cannabis cultivation in the State. The committee will visit areas where illegal cultivation of cannabis takes place, and submit a report within a month. Only on the basis of the report will the government take a decision. Mr. Sukhu said cannabis cultivation had been kept under the legal purview in several States.
Neighbouring Uttarakhand became the first State in the country to legalise cannabis cultivation in 2017. Controlled cultivation is being done in some districts of Gujarat, Madhya Pradesh and Uttar Pradesh.
Similarly, controlled cultivation of cannabis has been permitted in several countries such as Uruguay, Canada, the U.S., Austria, and Belgium.
The Chief Minister said the government would consider all aspects, including regulatory measures, and will study the models followed by other States that have legalised cannabis cultivation before taking the final call.
Database on 10,000 genomes to be ready for research access (Page no. 10)
(GS Paper 3, Science and Technology)
The Genome India Project, a Centre-backed initiative to sequence 10,000 Indian human genomes and create a database, is about two-thirds through, said Rajesh Gokhale, Secretary, Department of Biotechnology (DBT).
We have sequenced close to 7,000 genomes and 3,000 of these are already available for public access by researchers. We expect the 10,000 genomes to be completely sequenced by the end of the year,” Mr. Gokhale said at a conference organised by the Association of Biotech-Led Enterprises (ABLE), an industry group.
About 20 institutions across India are involved in the project though the analysis and coordination is done out of the Centre for Brain Research, Indian Institute of Science (IISc), Bangalore.
The Indian population of 1.3 billion consists of over 4,600 population groups, and many of them are endogamous. Thus, the Indian population harbours distinct variations and often many disease-causing mutations are amplified within some of these groups.
Therefore, findings from population-based or disease-based human genetics research from other populations of the world cannot be extrapolated to Indians, says a note from the IISc.
Creating a database of Indian genomes means that researchers anywhere can learn about genetic variants that are unique to India’s population groups and use that to customise drugs and therapies.
It is necessary to create public infrastructure such as genomic databases – similar to what the Information Technology industry has created – for India’s biotechnology sector to expand and have more valuable companies and start-ups,” said Vijay Chandru, co-founder, Strand Life Sciences, and former president, ABLE.
Kiran Mazumdar-Shaw, ABLE co-founder, said that building such genomic-database infrastructure must involve greater “public-private partnerships.