Topic 1 : The clear message in the Court’s ‘no’ to electoral bonds
Context
The landmark judgment of the Supreme Court of India is a reminder that citizens need to be ever watchful in a democracy.
Funding limits removed
- The first legal issue is limit on funding by a corporate house or organisation. Again, the world over, this amount is limited to prevent undue influence on the government.
- Electoral bonds also removed the earlier limits on how much of its profits a company could donate to political parties.
- The scheme even allowed loss-making companies to make donations. This could have opened the door for shell companies to be formed with the purpose of channelling funds to political parties.
- The Election Commission of India has said that this opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties. This too has been reversed by the Court.
- Democracies went through a phase of crony capitalism, where big money funded political parties.
- In return, laws, policies, schemes and incentives were made for the benefit of the donors. In a limited way, the Supreme Court’s judgment prevents this from happening in India.
Amendment to the bill
- There was an Amendment to the Finance Bill.
- In any country, the central bank alone has the authority to issue currency such as notes and bonds.
- Section of the Reserve Bank of India (RBI) Act says that only the RBI or the Central Government authorized by the RBI Act shall draw, accept, make or issue any bill of exchange or promissory note for payment of money to the bearers of the note or bond.
- The Government amended the RBI Act using a Finance Act, and allowed under a new clause that the central government to authorise any scheduled bank to issue electoral bonds. This amendment to the Finance Act too has been struck down.
The underlying issues
- The Amendment to the RBI Act was passed in a Finance Bill as this does not have to be passed by the Rajya Sabha.
- Again, a number of laws were amended to introduce the electoral bonds such as the RBI Act 1934, the Representation of the People Act (RPA), 1951, the Income Tax Act 1961, and the Companies Act 2013.
- It was in response to a Central Information Commission (CIC) ruling that political parties have to be completely transparent about their funding. The electoral bonds were introduced to bypass the CIC ruling.
- The legal system remains opaque to the so-called ordinary citizen and voter.
- When four laws are amended to introduce a scheme that strikes at the root of democracy, namely transparency, layers of obfuscation are drawn over the scheme so that the citizen gives up trying to understand it.
- This also raises fundamental issues in a democracy. Any government with a majority can pass any Bill, which becomes law. There is no concept of an independent vote in India and ruling party members have to vote in favour of the government unlike in the United States.
The essence of the judgment
The Supreme Court judgment can be summarised as follows.
- The electoral bonds scheme has been struck down. All Amendments to the RPA Act, the Finance Act 2017, and the Companies Act 2013 are violative of Articles 19 and 14 of the Constitution.
- The Supreme Court has directed the State Bank of India (SBI), the sole bank receiving funds in exchange for electoral bonds, to stop issuing them.
- The SBI has to submit the full details of all electoral bonds that have been issued so far, to the Election Commission of India (ECI) by March 6, 2024.
- In turn, the ECI has to publish this information on its website within two weeks.
Conclusion
We need to note that two constitutional bodies, the ECI and the Supreme Court, have acted in favour of democracy. The power of judicial review of laws passed by Parliament on the basis of the Constitution is precious. We need to applaud the Constitution and those who framed it.
Topic 2 : Brave new world
Context
India must invest in fundamental research to develop reliable drugs.
About
- Expectations are high that a free trade agreement involving India and the European Free Trade Association (EFTA) is close to fruition.
- However, a bone of contention relates to intellectual property rights, and has persisted as an issue since 2008.
- Switzerland and Norway, which are prominent members of EFTA, host several of the pharmaceutical and biotechnology companies that are responsible for several of the drugs and therapeutics that underpin health care globally.
EFTA
- EFTA is an intergovernmental organization that was established in 1960 as an alternative trade bloc for those European states that were unable or unwilling to join the European Union (EU).
- EFTA comprises Iceland, Liechtenstein, Norway, and Switzerland, which are not part of the EU but have access to its single market through various agreements.
- EFTA is India's 9th largest trading partner, accounting for about 2.5% of India's total merchandise trade in 2020-21.
- The main items of India's exports to EFTA are textiles, chemicals, gems, and jewelry, machinery, and pharmaceuticals.
- The main items of India's imports from EFTA are machinery, chemicals, precious metals, and medical instruments.
The issues
- The nature of the pharma industry — it costs much to discover a useful effective drug and relatively little to make generic copies of it — with demand that is far disproportionate to affordability, means that there is a constant tussle between the inventors and the generic-drug companies.
- Patenting, or an exclusive monopoly for a fixed number of years to originators and a reciprocal right by governments to issue directions for ‘compulsory licensing,’ thereby selectively breaking such monopolies in the interest of public health, has brokered the peace and sustained the global pharma industry for decades.
- But new legal innovations such as data exclusivity continue to inveigle themselves in free trade negotiations.
- Under this provision, all the clinical-trial data that concerns the safety and efficacy of a drug generated by the originator firm becomes proprietary and out of bounds for a minimum period of six years.
- Permission to make a generic is possible if a country’s regulator can rely on supplied clinical trial data to approve a drug. For this, generic makers usually rely on the originator’s published data.
The principle of data exclusivity
- The principle of data exclusivity is present among European countries as well as in agreements involving many developing countries.
- Were it to take effect in India, it could significantly hinder India’s drug industry which is also a major exporter of affordable drugs.
- Indian officials have rejected data exclusivity as a point of negotiations in the FTA, though leaked drafts of the agreement suggest that it is alive.
- However, India’s rise up the drug manufacturing chain in the last few decades means that it must invest in an ecosystem that can conduct ethical drug trials and make new molecules and therapeutics from scratch.
Conclusion
The paradigm that drug development will always be expensive and confined to the West need not be permanent, as was seen in the development of several novel technology approaches to developing vaccines in India during the COVID-19 pandemic. But as preparation, India must invest substantially more in fundamental research to incubate the local drug industry into the future.