Q.1) Through Several efforts by the government, the corporate governance norms have been tightened significantly however some critical issues remain. Discuss.
Corporate governance framework in India:
- The Companies Acts 2013 has provisions concerning Independent Directors, Board Constitution, General meetings, Board meetings, Board processes, Related Party Transactions, Audit Committees, etc.
- SEBI (Securities and Exchange Board of India) Guidelines ensure the protection of investors and have mandated the companies to adhere to the best practices mentioned in the guidelines.
- Accounting Standards issued by the ICAI. The disclosure of financial statements is also made mandatory by the ICAI backed by the Companies Act 2013.
- Standard Listing Agreement of Stock Exchanges applies to the companies whose shares are listed on various stock exchanges.
Despite multiple legal provisions, corporate scams to the tune of billions continue to affect the country on a continuous basis.
Way ahead for India – Uday Kotak committee recommendations:
- Disclosure requirements
- Listed companies should disclose the utilisation of funds raised from preferential allotment and qualified institutional placement.
- Annual report should contain the disclosure of all the fees paid to statutory auditors.
- If auditors are changed, then their reasons for resignation should be disclosed to the stock exchanges.
- The expertise/skills of directors and Board members need to be disclosed.
- Listed entities are also required to disclose in the annual report any transactions of the listed entity with any promoter or promoter group which holds more than 10% of the shareholding.
- No person who is a part of the promoter group can be appointed as an independent Director. Persons who are non-independent Directors in some other entity in which a non-independent Director of the listed entity is an independent director will not be eligible to be appointed as an independent Director in the listed entity.
- The role of certain Board Committees need to be expanded. The Audit Committee is additionally charged with the responsibility for the utilisation of loans advanced by the holding companies to subsidiary companies in excess of Rs 100 crores or 10% of the asset size of the subsidiaries.
- Nomination and Remuneration Committee is now required to recommend payments of the senior management and the Risk Management Committee has also been made responsible for assessing cybersecurity threats.
- The maximum listed companies in which one can hold directorships has now been reduced to eight.
- The meaning of material subsidiaries has been expanded to include subsidiaries which are worth 10% of the consolidated income or the net worth of the listed company.
Q.2) Electoral Bond Scheme with a view to cleansing the prevailing culture of political sponsorship cannot really deliver whatever it was intended to. Critically Analyse.
Electoral bonds are essentially bearer bonds that ensure donor anonymity. They will be issued by a notified bank for specified denominations. The party can convert these bonds back into money via their bank accounts.
Challenges with Electoral bonds:
- Increased anonymity as the annual contribution reports of political parties to be furnished to the EC need not mention names and addresses of those contributing by way of electoral bonds.
- Even donations greater than 20,000 are not reported after the launch of electoral bonds
- Even if there are electoral bonds, there is no limitation on giving cash to the political parties.
- Electoral bonds are more to do with eliminating black money and less to do with electoral reforms.
- There is no authority that keeps a constant check on the money being donated
- Both the banks in which donor donates and acceptor accepts report to the RBI ,which is subjected to the RBI Act and should act accordingly
Q.3) What are the major reasons that can be attributed for Surat Split. Highlight the major differences between moderates and extremists.
Reasons for surat split:
- The Extremists wanted to extend the Boycott and Swadeshi Movement to regions outside Bengal and also to include all forms of associations (such as government service, law courts, legislative councils, etc.) within the boycott programme and thus start a nationwide mass movement. The Moderates, on the other hand, were not in favour of extending the movement beyond Bengal and were totally opposed to boycott of councils and similar associations. They advocated strictly constitutional methods to protest against the partition of Bengal.
- The Extremists, emboldened by the proceedings at the Calcutta session, gave a call for wide passive resistance and boycott of schools, colleges, legislative councils, municipalities, law courts, etc. The Moderates, encouraged by the news that council reforms were on the anvil, decided to tone down the Calcutta resolution.
- The Extremists wanted the 1907 session to be held in Nagpur with Tilak or Lajpat Rai as the president and reiteration of the swadeshi, boycott and national education resolutions. The Moderates wanted the session at Surat in order to exclude Tilak from the presidency. They wanted Rashbehari Ghosh as the president.
Demands of early nationalists (or) moderates:
- Moderates aimed at administrative and constitutional reforms.
- Moderates wanted more Indians in the administration and not to an end of British rule.
- Moderates believed in constitutional means and worked within the framework of the law. Their methods including passing resolutions, persuasion, sending petitions and appeals.
- Most of the moderate leaders were inspired by the ideas of western philosophers like Mill, Burke, Spencer, and Bentham. Moderates imbibed western ideas of liberalism, democracy, equity, and freedom.
Examples of moderate leaders-Dadabhai Naoroji, Gopal Krishna Gokhale etc.
Demands of later nationalists:
- Extremists aimed at nothing short of swaraj as it existed in the United Kingdom and its self-governing colonies. Tilak said, “Swaraj is my birth right and I shall have it”.
- Extremists wanted to end the British rule.
- Extremist denounced British rule and defied it. Many of them were arrested because of anti-British activities.
- Extremists believed in atma shakti or self-reliance as a weapon against domination.
- Extremist rejected British rule and held it responsible for the backwardness and poverty of the Indian people.
Examples of extremist leaders- Bala Gangadhara Tilak, Bipin Chandra Pal and Lala Lajpat Rai, Aurobindo Ghosh.
Q.4) What do you understand by Environment Impact Assessment (EIA)? How can it be made more effective?
EIA is the term used for the assessment of the environmental consequences of a project prior to moving forward with the proposed action. It is a management tool to minimize adverse impacts of the developmental projects on the environment and to ensure optimal use of natural resources for sustainable development.
To make EIA more effective:
- Compliance needs to be seen as the minimum acceptable standard instead of sole focus on regulatory and legal procedures.
- All those projects where there is likely to be significant alteration of ecosystem, need to go through the process of environmental clearance.
- Public hearing should be made applicable to all exempt categories which have environmental impacts.
- A central fund could be created which contains fees deposited by project proponents.
- All EIAs should clearly state what adverse impacts of the proposed projects are. This should be a separate chapter and not hidden within technical details.
- Capacity building of NGOs, civil society groups and local communities to use the EIA notification towards better decision making.