Month: January 2021

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JSA viewpoint – Sustainable Development and Climate Change – Economic Survey, 2021

India has made significant and commendable progress towards meeting its sustainability and climate goals. The nation’s commitment to sustainability has been enshrined as a central tenet of governance by the Supreme Court. A sweeping and broad-ranging set of initiatives have been launched, ranging from increasing its renewable footprint to creating a carbon sink to upscaling electric vehicle roll-out. As a result of these efforts, the country has ensured that it ends the decade on a positive note, and has laid a robust foundation to build on these successes in coming years. Of particular note is the rise in the installed capacity of solar power pursuant to the National Solar Mission, with a cumulative capacity of 36.9 GW having been commissioned as of November 2020, around 36 GW in development, and a further 19 GW tendered.

In coming years, thanks to financial support under the FAME scheme, we may expect to see over two lakh electric vehicles traversing India’s roadways, a development that is sure to put India firmly on the path to decarbonising its vehicular fleet. Going forward, it is imperative that India maintains momentum and start taking global centre-stage and leadership through both action and intent. In sync with and taking cue from international best practice, present climate resilience efforts may be bolstered by means of market based tools and instruments to fund, finance and incentivise climate action. It is time for the spotlight to be cast on climate finance to catalyse efforts to tackle climate change and for greening the economy. The Economic Survey has rightly highlighted the many successes, and it is for the budget to build on these foundations.

Viewpoint by Vishnu Sudarsan and Kartikeya GS.

JSA Viewpoint – Infrastructure – Economic Survey

The Economic Survey 2021 strikes the right cords with respect to Indian Infrastructure by highlighting

  • Significance of robust infrastructure for overall economic growth emphasizing that in the absence of adequate infrastructure, the economy operates at a suboptimal level.
  • Ambitious targets of infrastructure investments of Rs.111 lakh crores (US$ 1.5 trillion) during FY 2020 to FY 2025 under the National Infrastructure Pipeline with a projected 79% investment (Rs.87.7 lakh crores) coming from Central and State Governments with 21% (Rs. 23.3 lakh crores) from private sector – 54% being shared by energy and transport (roads and railways).
  • In the past most of the private investment has come through public private partnerships.
  • Recent policy initiatives in terms of the Atma Nirbhar Bharat and cabinet approval of the PSU policy of opening up all sectors of the economy (even sensitive ones) to private sector with an emphasis on disinvestment.
  • ES-2021 acknowledges that gross capital formation has slid from 34% of GDP (in FY-2015) to lowest in past 2 decades at 26.7% of GDP (in FY-2021), identifying this as the single largest contributor to the contraction in GDP in FY-2021.

There are some generic feel-good statements regarding expansion of public investment which is expected to crowd private investors, and deregulation and liberalisation which is expected to unlock entrepreneurial energies and improve private investor’s risk appetite. However, perhaps advisedly it leaves a very important element of how will this infrastructure development get financed unaddressed.

Let us watch this space in the Budget speech for some concrete investment commitments as also reform proposal to address the 4 laggards in Indian regime that is shackling the entrepreneurial spirits – Enforcing Contracts, Registering Property, Starting a Business and Paying Taxes.

Viewpoint by Amit Kapur.

Impact of COVID-19, on proposed inclusion of Aviation Turbine Fuel (ATF) under the ambit of Goods and Services Tax (“GST”)

With the aviation sector reeling under the impact of COVID-19, the Government may propose inclusion of Aviation Turbine Fuel (ATF) under the ambit of Goods and Services Tax (“GST”). Since GST is a creditable levy which can be offset against the GST liability suffered by the airlines on their revenues, the move would result in lower tax costs for the airlines and would provide the industry a much-needed relief from high operational costs.

While the proposal would require an approval from the GST Council, the budget may put forth a roadmap for this legislative change and initiate the process for building the consensus amongst Centre and the States on this sensitive matter, which has been a bone for contention for quite some time. This may subsequently pave the roadmap for inclusion of other petroleum products into GST over a period of time, starting with Natural Gas and extending to other petroleum products. “

Pre Budget – JSA Livewire Budget, 2021

With unprecedented times, we see unprecedented budgets –the Indian Government will have to increase the budgetary allocation to the healthcare and the pharma sector to give impetus to the vaccination drive. The negotiations between Indian vaccine manufacturers hint at a ballpark figures of INR 60,000 to 70,000 Crores, merely to procure vaccines for the Indian population. These estimates exclude the storage and the transportation costs. As a reference point, the allocation for the current FY 2020-21 stood at INR 67,000 Crore, and fell short of the target of 2.5% of the GDP. Basis the statistics of the Finance Ministry, the Indian Government has restricted its budget allocation for the health sector between 1.2% to 1.6% of the GDP in the previous decade (2010-20). To counter the pandemic’s effects, the Government will need stretch to its bottom dollar. The Government should also seek to increase the monetary allocations under the PLI Scheme to attract investments, provide faster single-window approvals, reduce/exempt duty on import of inputs and parts of medical devices, and rationalise GST rates on parts used in manufacturing of medical equipment.

Who decides extension of mandate of arbitral tribunals under S. 29A of the Arbitration Act

There is a divergence of views. The Kerala High Court has adopted the literal interpretation that an application for extension of time lies before the Civil Court or the High Court in exercise of original civil jurisdiction. Delhi and Gujarat High Courts have taken a contrary view and interpreted ‘Court’ in S. 29A(4) to mandatorily mean the High Court by adopting a contextual interpretation to the term ‘Court’ premised on the powers of the High Court under S. 11.

Interestingly, the Supreme Court in a recent judgment in HARSAC v. Pan India had occasion to consider grant of extension under S. 29A by Additional District Judge, Chandigarh. While the judgment does not go into the issue of which court will have jurisdiction, the Supreme Court substituted the existing tribunal in exercise of powers under S. 29A(6) without setting aside the extension order itself.

In light of the recent decision Supreme Court decision in Vidya Drolia which affirmed that Patel Engineering has been legislatively overruled by the 2015 and 2019 amendments, ‘Court’ in S. 29A should mean principal Civil Court of original jurisdiction in line with the decision of the Kerala High Court.

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