Since 1949, 07 December is observed as Armed Forces Flag Day throughout India to honour the martyrs as well as men and women in uniform, who valiantly fight on our borders to safeguard the country’s honour. It is an important occasion to remind the nation of its obligation to look after veterans, disabled soldiers, war widows and dependents of those who have sacrificed their lives for the safety, honour and Integrity of the motherland.

The ‘Armed forces Flag Day Fund’ (AFFDF) has been constituted by the Government of India for the welfare and rehabilitation of the Ex-Servicemen (ESM) community. There are more than 30 lakh ESM Including 6.5 Iakh widows and around 60,000 ESM are added every year due to early superannuation. Contributions received from prospective donors of AFFDF are utillsed to provide basis sustenance needs of the ESM community through a medium of welfare schemes.

The Insolvency and Bankruptcy Code, 2016 was enacted to provide a time-bound process to resolve insolvency among companies and individuals. Insolvency is a situation where an individual or company is unable to repay their outstanding debt. Last month, the government promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 amending certain provisions of the Code. The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018, which replaces this Ordinance, was introduced in Lok Sabha last week and is scheduled to be passed in the ongoing monsoon session of Parliament. In light of this, we discuss some of the changes being proposed under the Bill and possible implications of such changes.

What was the need for amending the Code? In November 2017, the Insolvency Law Committee was set up to review the Code, identify issues in its implementation, and suggest changes. The Committee submitted its report in March 2018. It made several recommendations, such as treating allottees under a real estate project as financial creditors, exempting micro, small and medium enterprises from certain provisions of the Code, reducing voting thresholds of the committee of creditors, among others. Subsequently, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, was promulgated on June 6, 2018, incorporating these recommendations.

What amendments have been proposed regarding real estate allottees? The Code defines a financial creditor as anyone who has extended any kind of loan or financial credit to the debtor. The Bill clarifies that an allottee under a real estate project (a buyer of an under-construction residential or commercial property) will be considered as a financial creditor. These allottees will be represented on the committee of creditors by an authorised representative who will vote on their behalf. This committee is responsible for taking key decisions related to the resolution process, such as appointing the resolution professional, and approving the resolution plan to be submitted to the National Company Law Tribunal (NCLT). It also implies that real estate allottees can initiate a corporate insolvency resolution process against the debtor.

Can the amount raised by real estate allottees be considered as financial debt? The Insolvency Law Committee (2017) had noted that the amount paid by allottees under a real estate project is a means of raising finance for the project, and hence would classify as financial debt. It had also noted that, in certain cases, allottees provide more money towards a real estate project than banks. The Bill provides that the amount raised from allottees during the sale of a real estate project would have the commercial effect of a borrowing, and therefore be considered as a financial debt for the real estate company (or the debtor).

However, it may be argued that the money raised from allottees under a real estate project is an advance payment for a future asset (or the property allotted to them). It is not an explicit loan given to the developer against receipt of interest, or similar consideration for the time value of money, and therefore may not qualify as financial debt.

Do the amendments affect the priority of real estate allottees in the waterfall under liquidation? During the corporate insolvency resolution process, a committee of creditors (comprising of all financial creditors) may choose to: (i) resolve the debtor company, or (ii) liquidate (sell) the debtor’s assets to repay loans. If no decision is made by the committee within the prescribed time period, the debtor’s assets are liquidated to repay the debt. In case of liquidation, secured creditors are paid first after payment of the resolution fees and other resolution costs. Secured creditors are those whose loans are backed by collateral (security). This is followed by payment of employee wages, and then payment to all the unsecured creditors.

While the Bill classifies allottees as financial creditors, it does not specify whether they would be treated as secured or unsecured creditors. Therefore, their position in the order of priority is not clear. What amendments have been proposed regarding Micro, Small, and Medium Enterprises (MSMEs)?

Earlier this year, the Code was amended to prohibit certain persons from submitting a resolution plan. These include: (i) wilful defaulters, (ii) promoters or management of the company if it has an outstanding non-performing asset (NPA) for over a year, and (iii) disqualified directors, among others. Further, it barred the sale of property of a defaulter to such persons during liquidation. One of the concerns raised was that in case of some MSMEs, the promoter may be the only person submitting a plan to revive the company. In such cases, the defaulting firm will go into liquidation even if there could have been a viable resolution plan.

The Bill amends the criteria which prohibits certain persons from submitting a resolution plan. For example, the Code prohibits a person from being a resolution applicant if his account has been identified as a NPA for more than a year. The Bill provides that this criterion will not apply if such an applicant is a financial entity, and is not a related party to the debtor (with certain exceptions). Further, if the NPA was acquired under a resolution plan under this Code, then this criterion will not apply for a period of three years (instead of one). Secondly, the Code also bars a guarantor of a defaulter from being an applicant. The Bill specifies that such a bar will apply if such guarantee has been invoked by the creditor and remains unpaid.

In addition to amending these criteria, the Bill also states that the ineligibility criteria for resolution applicants regarding NPAs and guarantors will not be applicable to persons applying for resolution of MSMEs. The central government may, in public interest, modify or remove other provisions of the Code while applying them to MSMEs.

What are some of the other key changes being proposed? The Bill also makes certain changes to the procedures under the Code. Under the Code, all decisions of the committee of creditors have to be taken by a 75% majority of the financial creditors. The Bill lowers this threshold to 51%. For certain key decisions, such as appointment of a resolution professional, approving the resolution plan, and making structural changes to the company, the voting threshold has been reduced from 75% to 66%.

The Bill also provides for withdrawal of a resolution application, after the resolution process has been initiated with the NCLT. Such withdrawal will have to be approved by a 90% vote of the committee of creditors.

Need of the hour: Right now the only mechanism is Section 126 and EC instructions on paid news. We have to bring in a robust mechanism for conduct on social media platforms.

What is fake news? Fake news is a type of yellow journalism that consists of deliberate misinformation or hoaxes spread via the traditional print, broadcasting news media, or via Internet-based social media. Fake news is written and published with the intent to mislead in order to gain financially or politically, often with sensationalist, exaggerated, or patently false headlines that grab attention.

The main driving force behind fake news remains: Getting easy viewership through sensational news-e.g. dubbing foreign prisoners as spies or terrorists without any proof Directed towards a particular organization or person with an intention to either glorify it or to bring malice.eg. a news channel was established to defend the accused in Jessica Lal murder case.

Dangers of fake news: Political: Swaying or polarising public opinion. Example Recent American election, UP elections where certain facts are quoted out of context/partially. Significant impact on the nature of polity. Religious: Promoting religious ideologies. Glorifying one religion while despising others Ex. Right wing violence meted out by Gau rakshaks leads to religious polarisation and communal unrests.

Criminal: Sensationalising crimes by blowing them out of proportion. Misleads people rather than making them aware. Instils irrational fears. Fake news has also been used to dupe gullible people financially. The reach of news has given chit fund schemes an altogether new arena as well as has introduced the concept of online fraud through spam mails.

It hampers spirit of common brotherhood and raises intolerance. Eg. 2012 mass exodus of North-Eastern people from Bangalore on false online threats. Over the time it shapes the thinking of society at large. Portrayal of India as an unsafe destination for women by international media has created a false image of a nation.

What is needed? Independent, trusted and effective press regulation. Mainstream media must use social media tools intensively in order to defend the truth, present the correct information and balance opinions. Curb media ownership. We need an open debate on the impact of media concentration on our democracy and wider culture. There should be clear limits on media ownership so that powerful proprietors with vested interests are not allowed to dominate the news agenda.

Define fake news legally. Heavy punitive measures for whosoever violates the said definition. There should be grievance redressal mechanisms and arbitration spaces to resolve issues. Digital media literacy among people to increase scrutiny and feedbacks of the content. Technical solutions that assess the credibility of information circulating online are also needed.

Beyond Fake News Project: What is it? The British Broadcasting Corporation (BBC) has devised a new campaign that is aimed at fighting back against disinformation and fake news. It lays a major focus on global media literacy, including workshops and debates in countries like India.

About “Heart Attack Rewind”: “Heart Attack Rewind”, a 30-second public service announcement, will be broadcast in 17 languages for a period of four weeks on YouTube, Facebook, Hotstar, and Voot. It will also be placed on outdoor hoardings and run on radio stations in Delhi and the National Capital Region.

The campaign will warn citizens about the health hazards of consuming trans-fats and offer strategies to avoid them through healthier alternatives. “Heart Attack Rewind” is a follow-up to an earlier campaign called “Eat Right”, which was launched on July 11, 2018. As part of the campaign, edible oil industries took a pledge to reduce trans-fat content by 2% by 2022. Later, food companies also took a pledge to reformulate packaged foods with reduced levels of salt, sugar and saturated fat.

Need for awareness and significance of the campaign: Studies have recently shown that 60,000 deaths occur every year due to cardiovascular diseases, which in turn are caused due to high consumption of trans-fats. Since the impact of trans-fats on human health is increasing exponentially, it is very important to create awareness about them. This campaign will concentrate on the demand side (consumers), who in turn, will push the supply side (food manufacturers) to come up with various strategies in order to reduce and later replace trans-fats.

Trans-fats: Trans-fatty acids (TFAs) or Trans fats are the most harmful type of fats which can have much more adverse effects on our body than any other dietary constituent. These fats are largely produced artificially but a small amount also occurs naturally. Thus in our diet, these may be present as Artificial TFAs and/ or Natural TFAs.

Artificial TFAs are formed when hydrogen is made to react with the oil to produce fats resembling pure ghee/butter. In our diet the major sources of artificial TFAs are the partially hydrogenated vegetable oils (PHVO)/vanaspati/ margarine while the natural TFAs are present in meats and dairy products, though in small amounts.

Harmful effects: TFAs pose a higher risk of heart disease than saturated fats. While saturated fats raise total cholesterol levels, TFAs not only raise total cholesterol levels but also reduce the good cholesterol (HDL), which helps to protect us against heart disease. Trans-fats consumption increases the risk of developing heart disease and stroke.

It is also associated with a higher risk of developing obesity, type 2 diabetes, heart disease, metabolic syndrome, insulin resistance, infertility, certain types of cancers and can also lead to compromised fetal development causing harm to the yet to be born baby.

Why they are increasingly being used? TFA containing oils can be preserved longer, they give the food the desired shape and texture and can easily substitute ‘Pure ghee’. These are comparatively far lower in cost and thus add to profit/saving.

Permissible limit: WHO recommends that trans-fat intake be limited to less than 1% of total energy intake and has called for the total elimination of TFAs in global food supply by 2023. FSSAI has proposed to limit TFA limit in foods to 2% and eliminate trans-fats from foods by 2022.

WHO recommendations: In May 2018, WHO has released draft recommendations on limiting the intake of trans-fats. These draft recommendations, the first since 2002, are aimed at controlling non-communicable diseases (NCDs), which are responsible for an estimated 39.5 million death (72%) of the 54.7 million deaths worldwide in 2016.

Key recommendations: Saturated fatty acids should not comprise more than 10% of your daily calorie intake. Trans-fatty acids should not comprise more than 1% of your daily calorie intake. Use heart-healthy polyunsaturated fatty acids (PUFAs) as replacement. The recommendations are applicable to both adults and children.

Initiative by Kerala: Kerala is planning to launch an initiative to enforce dietary guidelines, involving the reduction of trans-fatty acids (TFAs), salt and sugar in commercially available foods in the State.

The initiative, with technical support from the World Bank, WHO and the Food Safety and Standards Authority of India (FSSAI), is being launched as unhealthy diet is pushing up metabolic syndrome and premature deaths due to non-communicable diseases (NCDs) among Keralites.

Background: The Global Nutrition Report was conceived following the first Nutrition for Growth Initiative Summit (N4G) in 2013 as a mechanism for tracking the commitments made by 100 stakeholders spanning governments, aid donors, civil society, the UN and businesses.

Highlights of the report: Global burden of malnutrition “remains unacceptably high and progress unacceptably slow”. Under-nutrition accounts for around 45% of deaths among children under five in low- and middle-income countries.

Overweight and obesity has led to around 4 million deaths and 120 million healthy years of life lost across the globe, with around 38.9% adults found to be overweight. Among children under five years of age, 150.8 million are stunted, 50.5 million are wasted and 38.3 million are overweight; while 20 million babies are born underweight each year, it says.

The impact of malnutrition on global economy is close to US$3.5 trillion per year, with obesity alone costing US$500 billion per year. A major section of the study looks at the quality, nutrient content and type of food consumed across the globe. The results suggest a disparity between developed and emerging markets, says the report. The report says that regardless of wealth, school-age children, adolescents and adults are consuming too many refined grains, sugary foods and drinks, and not enough fruits, vegetables and whole grains.

Where India stands? India holds almost a third (31%) of the global burden for stunting, the prevalence of which differs from state to state. As per the UNICEF, stunting, or low height for age, is caused by long-term insufficient nutrient intake and frequent infections.

Stunting varies greatly from district to district (12.4% to 65.1%), with 239 of 604 districts accounting for stunting levels above 40%. The differences between districts were a result of multiple factors, including gender, education, economic status, health, hygiene, and other demographic factors.

India is the country with the largest number of children who are stunted at 46.6 million, followed by Nigeria (13.9 million) and Pakistan (10.7 million). The urban prevalence of stunting on average 19.2% compared with 26.8% in rural areas.

While wasting, or low weight for height, affects a greater proportion of rural children than urban. India again tops the list with the most number of wasted children at 25.5 million, followed by Nigeria (3.4 million) and Indonesia (3.3 million). India is also among the countries with more than a million children who are overweight. As part of the report, a case study in Rajasthan found that key areas of infant and young child feeding and micronutrient supplementation were underfunded.

Way ahead- need of the hour- suggestions by the report: Break down silos between malnutrition in all its forms. Prioritise and invest in the data needed and capacity to use it. Scale up financing for nutrition – diversify and innovate to build on past progress.

Galvanise action on healthy diets – engage across countries to address this universal problem. Make and deliver better commitments to end malnutrition in all its forms – an ambitious, transformative approach will be required to meet global nutrition targets.

What to study? Static Part: About G20, Meaning of fugitive economic offender. Dynamic and Current: The proposed action plan- need, significance, challenges and the need for international collaboration. Context: India has presented a nine-point programme to take action against fugitive economic offenders at the ongoing G20 Summit in Argentina.

The agenda includes: Strong and active” cooperation among the G-20 nations. The document highlights the importance of cooperation in legal processes such as “effective freezing of the proceeds of crime; early return of the offenders and efficient repatriation of the proceeds of crime should be enhanced and streamlined”. Joint efforts to be made by the G20 nations to form a mechanism that denies entry and safe havens to all fugitive economic offenders.

There is need for the “effective” implementation of the principles of the United Nations Convention Against Corruption (UNCAC) and the United Nations Convention Against Transnational Organised Crime (UNOTC). The Financial Action Task Force (FATF) should be called upon “to assign priority and to focus on establishing international co-operation that leads to a timely and comprehensive exchange of information between the competent authorities”.

The FATF should be tasked to formulate a standard definition of fugitive economic offenders. The FATF should also develop a set of commonly agreed and standardised procedures related to identification, extradition and judicial proceedings for dealing with fugitive economic offenders to provide guidance and assistance to G-20 countries, subject to their domestic law”.

There is need for setting up of a common platform “for sharing experiences and best practices including successful cases of extradition, gaps in existing systems of extradition and legal assistance.” The G20 forum should consider initiating work on locating properties of economic offenders who have a tax debt in the country of their residence for its recovery.

Background: The programme for curbing the menace of fugitive economic offenders comes amid heightened efforts by India to apprehend a number of such offenders, including Vijay Mallya, Nirav Modi and Mehul Choksi.

What’s the issue? The Polavaram project was accorded national status in 2014 in the Andhra Pradesh Bifurcation Act and its design was changed. The petitioner had told the court that since the dam design has been changed and new components were added, it’d require a new environmental clearance.

About the Polavaram project: Polavaram Project is a multi-purpose irrigation project. The dam across the Godavari River is under construction located in West Godavari District and East Godavari District in Andhra Pradesh state and its reservoir spreads in parts of Chhattisgarh and Orissa States also.

The project is multipurpose major terminal reservoir project on river Godavari for development of Irrigation, Hydropower and drinking water facilities to East Godavari, Vishakhapatnam, West Godavari and Krishna districts of Andhra Pradesh.

The project is likely to displace over 1.88 lakh people across 222 villages and so far, 1,730 persons in six villages have been rehabilitated by the government.

As a part of the Swachhta Pakhwada of Ministry of Civil Aviation (2018), the 15 day cleanliness drive, has successfully been observed in M/o Civil Aviation and all of its organization.

Swachhta Pakhwada: Started in April 2016. The objective is to bring a fortnight of intense focus on the issues and practices of Swachhta by engaging GOI Ministries/Departments in their jurisdictions. An annual calendar is pre-circulated among the Ministries to help them plan for the Pakhwada activities.

The Ministries observing Swachhata Pakhwada are monitored closely using online monitoring system of Swachhata Samiksha where action plans, images, videos related to Swachhata activities are uploaded and shared.