What’s in today’s article?

• Why in News?
• What is the Case Background?
• SC Guidelines on Demolition Procedures
• SC’s Reasoning Behind the Guidelines
• Demolition Laws and Practices Across Indian States
• Impact of the SC’s Verdict
• Conclusion

Why in News?

• Exercising its powers under Article 142 of the Constitution, the Supreme Court laid down a series of guidelines to ensure that due process is followed for demolishing the properties of citizens accused of crimes.
• This ruling comes after a series of cases in which state authorities allegedly demolished properties as a punitive measure, a practice referred to by the Chief Justice of India (CJI) as “bulldozer justice.”

What is the Case Background?

• The SC's verdict addressed pleas challenging the practice of demolishing homes of individuals accused of criminal activities.
• This practice, seen in states like UP, MP, Uttarakhand and Rajasthan, has often led to accusations of bias and lack of due process.
• The ruling was prompted by recent cases in Ratlam (MP) and Udaipur (Rajasthan), where demolitions were linked to allegations against family members involved in communal or criminal incidents.

SC Guidelines on Demolition Procedures:

• Mandatory notice period:
  • The Court mandates that a minimum of 15 days’ notice must be given to the property owner or occupier before a demolition.
  • This notice must outline the reasons for demolition and schedule a “personal hearing” to allow property owners a chance to contest.
• Hearing and final order:
  • Authorities must conduct a hearing and document all proceedings.
  • The final demolition order must include the arguments presented by the owner, the reasons for demolition, and whether full or partial demolition is required.
  • The Court emphasised that demolitions should be the last resort and ordered only when deemed absolutely necessary.
• Post-order process:
  • If a final order for demolition is issued, a 15-day period will follow to allow the owner time to either remove the structure or appeal in court.
  • Authorities must also record a video of the demolition and prepare an inspection and demolition report listing the personnel involved.

SC’s Reasoning Behind the Guidelines:

• Separation of powers:
  • The Court asserted that the judiciary, not the executive, is responsible for determining guilt.
  • It emphasised that punishing an accused by demolishing their property without a judicial trial oversteps executive boundaries.
• Public trust and accountability:
  • The Court highlighted the need for transparency, stating that public officials should be held accountable for misuse of authority, particularly when demolitions target properties merely because the owner is an accused.
• Right to shelter:
  • The SC noted that demolitions affect not only the accused but also other family members who have a constitutional right to shelter under Article 21 of the Constitution.
  • The guidelines aim to protect these individuals from losing their homes unjustly.

Demolition Laws and Practices Across Indian States:

• Rajasthan: Under provisions of the Rajasthan Municipalities Act, authorities can confiscate properties that encroach public land, provided they serve a written notice with grounds for confiscation and allow a chance for representation.
• MP: The MP Municipalities Act allows demolition of unauthorised constructions only after serving notice to owners.
• UP: The UP Urban Planning and Development Act mandates that an owner receive a minimum notice period of 15 days before demolition of unauthorised structures. The owner can appeal the order, but once finalised, it cannot be contested in court.
• Delhi: The Delhi Municipal Corporation Act allows removal of unauthorised structures with “reasonable opportunity” for the owner to appeal.
• Haryana: The Haryana Municipal Corporation Act, similar to Delhi’s DMC Act, provides owners a brief period to challenge demolitions but has a shorter window (3 days) to comply with demolition orders.

Impact of the SC’s Verdict:

• Providing a path forward: Affected families hope that the ruling will push local authorities toward providing restitution, either through compensation or through the restoration of demolished properties.
• Challenges in implementation:
  • While the SC’s verdict calls for transparency and accountability, there are still gaps in ensuring that compensation reaches those already affected.
  • Hence, the future policies must address the issue of restitution, ensuring fair outcomes for those unjustly impacted by “bulldozer justice.”

Conclusion:

• By safeguarding the right to shelter and enforcing accountability, the Court aims to prevent “bulldozer justice” and ensure that the government operates within constitutional boundaries.
• However, for those who have already lost their homes, the struggle for justice is far from over, as the questions about restitution remain unresolved.

Q.1. What is Bulldozer Justice?

Bulldozer Justice refers to the instant justice mechanism that is propagated by the government of various states to punish the alleged rioters and protestors by razing down their houses, stalls or any construction with the use of JCB.

Q.2. What is Article 142 of the Constitution of India?

Article 142 of the Constitution of India gives the Supreme Court the power to pass any orders or decrees necessary to ensure complete justice in any case before it. This power is known as the Supreme Court's "plenary power".

News: ‘Executive can’t become judge… decide person is guilty’: SC slams demolition of properties of accused, issues directives

What’s in today’s article?

• Why in News?
• What are Domestic Systemically Important Banks (D-SIBs)?

Why in News?

The Reserve Bank of India (RBI) has maintained the State Bank of India, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs), meaning they are classified as "Too Big To Fail." 

This status indicates that their stability is essential for providing uninterrupted banking services to the economy. The banks remain in the same risk category as in the 2023 D-SIB list.

What are Domestic Systemically Important Banks (D-SIBs)?

• About
  • D-SIBs are highly integrated into cross-jurisdictional activities and possess complex financial structures, making them essential to the economy. 
  • Their failure could cause widespread disruption and economic panic. Consequently, the government is likely to bail them out during financial crises.
    • SIBs are perceived as "Too Big To Fail" (TBTF), creating expectations of government support during crises. 
    • This perception enables SIBs to enjoy advantages in funding markets but also encourages risk-taking and reduces market discipline.
  • D-SIBs are also subject to specific regulations addressing systemic risks and moral hazard concerns.
• Need for the creation of D-SIBs
  • To address the systemic risks and moral hazard issues associated with SIBs, the RBI requires these banks to follow additional regulatory measures.
  • These measures are aimed at controlling potential competitive distortions and future financial distress.
• Background – Framework for D-SIBs
  • RBI had issued the Framework for dealing with D-SIBs in July 2014.
  • The D-SIB framework mandates annual disclosure of banks designated as D-SIBs since 2015.
  • It categorizes them into buckets based on their Systemic Importance Scores (SISs).
• Regulationsthese banks need to follow
  • Depending on the bucket in which a D-SIB is placed, an additional common equity requirement [Common Equity Tier 1 (CET1)] is applicable to it.
    • Tier 1 capital (measured by the capital adequacy ratio (CAR)) is the core measure of a bank's financial strength from a regulator's point of view.
  • It means that these banks have to earmark additional capital and provisions to safeguard their operations.
  • Foreign banks in India that are classified as Global Systemically Important Banks (G-SIBs).
    • G-SIBs must maintain an additional CET1 capital surcharge in India, proportionate to their Risk Weighted Assets (RWAs) in India, as specified by their home regulator.
    • Notable G-SIBs for 2023 include JP Morgan Chase, Bank of America, Citigroup, HSBC, Agricultural Bank of China, Bank of China, Barclays, and BNP Paribas.
• Two-Step Process for Selecting D-SIBs
  • The Reserve Bank of India (RBI) uses a two-step process to assess banks' systemic importance. 
  • First, a sample of banks is selected, excluding smaller banks to avoid unnecessary data burden. 
    • Only banks above a certain size are assessed, as smaller banks are deemed lower in systemic importance.
    • Banks are chosen based on their size, calculated as a percentage of GDP using the Basel III Leverage Ratio Exposure Measure. 
    • Banks with a size above 2% of GDP are included in the sample.
  • Once the sample is selected, the RBI calculates a composite score based on various indicators. 
  • Banks that exceed a set threshold are classified as D-SIBs and placed into different buckets depending on their systemic importance.
    • D-SIBs in lower buckets face a smaller capital surcharge, while those in higher buckets face a higher surcharge, ensuring a graded approach to capital requirements based on risk.
• Which banks have been classified as D-SIBs by the RBI?
  • RBI has reaffirmed SBI, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs), retaining their positions from the 2023 list. 
    • SBI and ICICI Bank were first designated as D-SIBs in 2015 and 2016, with HDFC Bank joining them in 2017. 
  • SBI has been placed in bucket 4, HDFC Bank in bucket 3 and ICICI Bank in bucket 1.
• Capital requirements for these D-SIBs
  • The RBI requires additional CET1 capital for D-SIBs based on their assigned buckets, ranging from 0.20% to 0.80% of risk-weighted assets (RWAs). 
  • Currently, SBI's additional CET1 requirement is 0.80%, HDFC Bank's is 0.40%, and ICICI Bank's is 0.20%. 

G-SIBs with branches in India must maintain an additional CET1 surcharge proportionate to their Indian RWAs, based on the CET1 buffer set by their home regulator.

Q.1. What are Domestic Systemically Important Banks (D-SIBs)?

D-SIBs are banks whose failure could lead to economic disruption. They are subject to stricter regulations, including higher capital requirements, to ensure their stability and avoid systemic risks during financial crises.

Q.2. What capital requirements do D-SIBs in India have?

D-SIBs must maintain additional Common Equity Tier 1 (CET1) capital, ranging from 0.20% to 0.80% of risk-weighted assets (RWAs), depending on their systemic importance, as per the RBI’s regulations.

News: Domestic Systemically Important Banks: Why are these banks ‘too big to fail’? | RBI |CNBC TV18

 What’s in today’s article?

• Why in News?
• What is a Trade War?
• America’s shifting trade wars and India in the crosshairs

Why in News?

China’s rapid economic rise as a major exporter has led to trade tensions, with the US launching tariff measures during Donald Trump’s presidency. As China’s trade surplus nears $1 trillion, Trump’s potential second term might witness more intense trade war. 

Trump's approach resembles past US actions against Japan in the 1970s, targeting similar issues like “state support” and “intellectual property theft.”

While Trump’s focus on China might indirectly benefit India due to its regional position, experts suggest India should support World Trade Organization (WTO) reforms and a rules-based trade order to ensure sustainable growth. Yet, India faces immediate competitive challenges from the US, especially in the pharmaceutical and services sectors.

What is a Trade War?

• About
  • A trade war occurs when countries impose tariffs or other trade barriers on each other to protect domestic industries or retaliate against trade practices perceived as unfair. 
  • These actions often lead to increased costs for consumers and disrupt global supply chains. 
  • Recent notable examples include the US-China trade war, where the US imposed tariffs on Chinese goods to address trade imbalances and allegations of intellectual property theft, prompting retaliatory tariffs from China.
• Implications
  • Boost to Domestic Industries
    • Tariffs on foreign goods can protect domestic industries from international competition. 
    • E.g., the US steel industry saw temporary benefits from tariffs on imported steel, as domestic producers faced less competition.
  • Encourages Local Investment
    • Trade barriers can incentivize countries to invest in domestic production. 
    • For example, China has accelerated its focus on technological self-reliance to reduce dependency on US technology amid trade tensions.
  • Higher Consumer Prices
    • Tariffs increase the cost of imported goods, which often gets passed on to consumers. 
    • During the US-China trade war, American consumers faced higher prices on goods like electronics and household items.
  • Disruption of Global Supply Chains
    • Trade wars can disrupt international production networks, leading to delays and inefficiencies. 
    • The 2018 US-China trade war impacted global tech and automotive industries as critical components sourced from China faced tariffs, causing delays.
  • Economic Slowdown
    • Prolonged trade conflicts can harm global economic growth. 
    • For instance, the IMF revised global growth projections downward during the US-China trade tensions due to reduced investment and uncertainty.

America’s shifting trade wars and India in the crosshairs

• Background - Overview of US Trade War and Tariff Hikes
  • US President-elect Donald Trump is poised to escalate trade tensions by imposing significant tariff hikes, with proposals for a 10%-20% increase on all imports and a 60% hike on Chinese goods. 
  • While tariff hikes are not new, the scale of this move may have global consequences.
  • The aim of these tariffs is to protect domestic industries and address trade imbalances, but they could lead to retaliatory tariffs and economic disruptions.
  • Past tariffs have primarily targeted China, Mexico, Canada. However, experts believe India might become the next target.
• Potential Impact on India
  • If Trump's administration intensifies trade friction, India may face negative consequences. 
  • US tariffs on sectors like pharmaceuticals, automobiles, textiles, steel, and aluminum could harm Indian exporters, especially in industries where India has a competitive advantage. 
  • India’s trade surplus with the US ($35.3 billion in FY24) could also be affected. 
    • This surplus could attract attention from the US, particularly if it views the trade imbalance as detrimental to US industries. 
    • Under Trump 2.0, India could face renewed pressure, especially in areas like intellectual property rights, labor standards, and digital trade policies.
  • However, if Trump's push for decoupling from China succeeds, India may benefit by attracting foreign investment and becoming a more prominent player in supply chains, particularly in emerging technologies.
    • Indian exporters might be able to fill the gap left by Chinese goods in global markets, especially in sectors where India has a competitive advantage, such as textiles, pharmaceuticals, and IT services.
• India’s options
  • Experts have said that tariff retaliation might be India's only effective response to new US taxes. 
    • This approach worked when India imposed tariffs on US agricultural products in retaliation for US steel and aluminum tariffs, resulting in a settlement under the Biden administration.
  • China has become India’s largest trading partner, surpassing the US, and India’s trade with Russia has increased significantly, with a goal of reaching $100 billion by 2030. 
  • These growing trade relationships provide India with opportunities for diversification and economic growth beyond its dealings with the US.

Q.1. How does the US-China trade war affect global industries?

The US-China trade war disrupts global supply chains, raises consumer prices, and creates uncertainty, especially in industries like technology and automotive, leading to inefficiencies and economic slowdowns globally.

Q.2. What impact could Trump's trade policies have on India?

Trump's tariff hikes could hurt Indian exports in sectors like pharmaceuticals and textiles. However, India may benefit from shifting global supply chains if it capitalizes on opportunities left by China.

News: Will India be a winner or loser when Trump unleashes trade war? | Indian Express

What’s in today’s article?

• Why in News?
• Comparing Generic and Compounded Drugs
• Key Issues in Drug Compounding
• Proposed Solution to Address Issues with Drug Compounding

Why in News?

• Novo Nordisk, the Danish pharmaceutical giant behind the popular drugs Wegovy (for weight loss) and Ozempic (to treat type 2 diabetes in adults), has requested that the U.S. Food and Drug Administration (FDA) stops the compounding of semaglutide-based medications.
• The company argues that compounded versions, created to meet rising demand, may pose safety risks to patients.

Comparing Generic and Compounded Drugs:

Key Issues in Drug Compounding:

• Limited regulations:
  • Under FDA guidelines, licensed pharmacists can legally compound medications to meet patient needs, particularly when branded versions are unavailable.
  • With Wegovy and Ozempic in high demand, compounding pharmacies have been formulating their own versions, prompting Novo Nordisk’s intervention.
  • American pharmaceutical firm Eli Lilly similarly sought to halt compounded versions of its drugs Mounjaro and Zepbound, intended for diabetes and obesity treatment.
  • The FDA has yet to issue a decision on either case.
    • Purity risks: Semaglutide’s intricate structure is challenging to replicate accurately. Hence, the compounded versions may lack precision, potentially compromising purity and stability.
• Risk of incorrect dosing:
  • The FDA-approved semaglutide is delivered through a single-use pen injector, ensuring precise dosage and clear usage instructions.
  • Compounded drugs, however, are often dispensed in multi-dose vials or syringes, raising the risk of incorrect dosing.
  • Reports cite patients accidentally overdosing, resulting in severe side effects like nausea and vomiting.
• Risking severe health issues:
  • Bioavailability - the degree to which the drug reaches the bloodstream - is crucial for semaglutide.
  • Without proper absorption, compounded versions may fail to provide the intended treatment effects, risking severe health issueslike heart disease, nerve damage, and kidney complications.
• Contamination risks:
  • Compounded semaglutide requires sterile facilities and precise handling to avoid contamination.
  • In recent years, the FDA has flagged sterility issues at compounding pharmacies, leading to significant recalls.

Proposed Solution to Address Issues with Drug Compounding:

• Adding Semaglutide to DDC list:
  • Novo Nordisk petitioned the FDA to place semaglutide on the Demonstrable Difficulties for Compounding (DDC) list, which would restrict its compounding when commercial options are available.
  • The FDA assesses drugs for the DDC list based on stability, bioavailability, dosage requirements, and sterility demands, all factors Novo Nordisk highlights in its case.

Q.1. What are generic drugs?

A generic drug has the same active pharmaceutical ingredient (API) as the original, but it may differ in some characteristics such as the manufacturing process, formulation, excipients, colour, taste, and packaging.

Q.2. Who regulates generic drugs in India?

India's regulatory landscape for generic drugs is governed by the Central Drugs Standard Control Organization (CDSCO), which operates under the Directorate General of Health Services, Ministry of Health and Family Welfare.

News: Why maker of ‘magic’ weightloss drug semaglutide wants copies banned