DAILY EDITORIAL DISCUSSION AND ANALYSIS(23rd March) - Sleepy Classes Skip to main content

DAILY EDITORIAL DISCUSSION AND ANALYSIS(23rd March)

 Corporate Governance/ Ethics (GS 3 & GS 4)

Going Beyond Shareholder Wealth (Business Line, 23rd March 2022)

Author: – Arun Maira

Reformed Capitalism

  • Capitalism must be reformed to enable more equitable, socially responsible, and environmentally sustainable economic growth.
  • Why is that even good human beings, with good values, when they are CEOs become tacitly complicit in the bad actions of companies?
  • Why do even good companies that we admire for their high standards sometimes do bad things?
  • The irony is that “best managed” companies are gauged from the perspectives of investors and stock markets only.

Accountability of Companies

  • The first rung is accountability to investors and lenders — the domain of finance, corporate accounting, auditing, corporate law, and stock market regulators.
  • The second rung is accountability to the direct participants in the business’s processes for financial value creation —customers, employees & Vendors.
  • Third is accountability for the effect of business operations on the physical environment.
  • Fourth is effect of the business’s products and processes on the lives of people — their health, their education, their values.
  • Lastly is accountability for the political health of the societies in which businesses operate i.e. human rights & fair democratic practices

Concerns Arising

  • Businesses have a selfish concern to make laws easier for them to do business and make profits.
  • Often it is perceived that the role of business in society is to run profitable operations and create value for shareholders.
  • Freedom for businesses, and minimum government, this became the dominant paradigm since the 1990s.
  • Realisation is dawning that everyone, including businesses, must act to improve the ‘commons’ they all share.
  • Businesses must also share the natural environment, as well as the quality of society including human rights and justice.

 

 

Corporate Power

  • Corporations have much larger resources to hire lawyers and lobby governments to promote their interests.
  • Some corporations are financially larger than many countries.
  • Corporations have become more equal in reality than ordinary human.
  • With rights, should corporations not have responsibilities, like every citizen, for building a good society?
  • Societies need new scorecards to measure the worthiness of businesses.
  • And business leaders need new yardsticks to measure societal values.
  •  The business of business remains the making of money.

Way Forward

  • CEOs MUST change their company’s DNA, to conform with the ideals of “conscious” capitalism or “green” capitalism.
  • Unfortunately, even if they want to they cannot go too far because their boards and they are legally enjoined to account to their shareholders only.
  • The legally mandated structures of corporations must change to enable companies to release the compassions of their leaders and their employees.
  • All companies must be mandated to report to society as rigorously as they account to their shareholder.

 

International Organizations (GS 2)

Case Against Russia (Indian Express, 23rd March 2022)

Author: – Prabhash Ranjan

Context

  • The ICJ the principal judicial organ of the UN has ordered Russia to immediately suspend its military operations in Ukraine.
  • This decision of far-reaching significance was rendered by the ICJ in response to Ukraine’s application for indication of provisional measures under Article 41 of the ICJ Statute
  • Ukraine moved the ICJ against Russia accusing it of falsely claiming that Ukrainians are committing genocide in their territory.
  • Ukraine believes that Russia is using this untruthful premise to start an illegal war.
  • As per Ukraine this breaches its rights under the Genocide Convention — a treaty that is binding to both Russia and Ukraine.

Genocide Convention

  • The Convention on the Prevention and Punishment of the Crime of Genocide (Genocide Convention) is an instrument of international law that codified for the first time the crime of genocide.
  • The Genocide Convention was the first human rights treaty adopted by the UNGA on 9 December 1948.
  • This signified the international community’s commitment to ‘never again’ after the atrocities committed during the Second World War.
  • Genocide is a crime that can take place both in time of war as well as in time of peace

Member states to Genocide Convention

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ICJ’s Reasoning

  • Court held that it had prima facie jurisdiction in the case because the subject matter fell under the Genocide Convention.
  • Russia contended that it’s formal basis for use of force against Ukraine was its right to self-defense under Article 51 of the UN Charter.
  • Since 2014, Russia has been repeatedly accusing Ukraine of committing genocide in the Donetsk and Luhansk regions.
  • As per ICJ Prima facie, this shows the existence of a “dispute” under Article IX of the Genocide Convention .
  • Hence the reasoning is that this bestows jurisdiction on the ICJ.

Reading the Judgement

  • While the court did not decide on whether Russia has breached the Genocide Convention, as this is a question of merits.
  • ICJ did express doubt over whether a country can unilaterally use force against another country for punishing or preventing an alleged act of genocide.
  • This indicates that Russia’s use of force is difficult to justify under the Genocide Convention.
  • ICJ held that if it does not indicate provisional measures, that is, order cessation of military action.
  • Then there is a real and imminent risk of irreparable harm to Ukraine’s rights.

Conclusion

  • ICJ’s decision is binding on Russia and constitutes part of its international legal obligations.
  • If Russia continues its military actions, it will be a brazen violation of international law. 
  • Cynics argue that none of this matters because the remedy for not complying with ICJ rulings lies with the UNSC.
  • But just because populist leaders like Vladimir Putin don’t care for international law does not diminish its significance.

 

Access to Essential Medicines (The Hindu, 23rd March 2022)

Author: – Biswajit Dhar & K. M. Gopakumar

Context

  • At the height of the COVID-19 pandemic in October 2020, India and South Africa had tabled a proposal in the WTO.
  • They were seeking a temporary waiver over the availability of affordable vaccines, medicines and other medical products.
  • Nearly 18 months later, 164 members of the WTO could not find common ground on the “waiver proposal”.
  • Even as 63 developing countries have become co-sponsors of the proposal.
  • Initially, all advanced countries opposed the proposal.
  • However after Biden Administration took over, USA backed the waiver BUT only for Vaccines.
  • As of today, only 14% of people in low-income countries have received at least one vaccine dose.

EU Solution

  • While opposing the concept of “waiver” of application and enforcement of IPRs, the EU had proposed in a submission in June 2021.
  • Compulsory licenses are a perfectly legitimate tool that governments may wish to use in the context of a pandemic.
  • Surprising to find that three of the four “Quad” members, who have been supporting the waiver proposal all this while.
  • Even they have diluted their stand and have accepted the EU’s proposal as the “compromise outcome”.

On Licences

  • Generally, patent laws, including that of India’s, allow for the grant of compulsory licenses.
  • That is in case if patent holders charge high prices on the proprietary medicines in exercise of their monopoly right.
  • Such licenses can usually be granted if efforts in obtaining voluntary licences from the patent holders have failed.
  • The “Quad” proposal states there that in case of a medical urgency, as is the case now, this condition will be waived.
  • In other words, there is no requirement to make efforts to obtain voluntary licences with the patent holders before granting compulsory licences.

 

 

Devil Lies in The Detail- QUAD Solution

  • The “Quad” solution can be used only by an “eligible member”, defined as a “developing country member” of the WTO.
  • That Member that “had exported less than 10%” of world exports of COVID-19 vaccine doses in 2021.
  • This eligibility condition seems to have been introduced to limit China’s expansion in the global vaccine market.
  • The Reality is that China is not one of the countries that would benefit from the “Quad” solution.
  • At the current juncture, India does not have to be concerned with the export restriction clause, as its share in global exports of vaccines was 2.4%.

Conclusion

  • Compulsory licences may not result in the outcome that the waiver proponents were aiming for.
  • According to the EU, when compulsory licences are granted, the “patent holder” receives adequate remuneration
  • However, transfer of know-how is not ensured.
  • This plain admission by the EU about the demerits of compulsory licences would make it difficult to scale up production of COVID-19 vaccine.
  • Accepting the “compromise outcome”, India and South Africa could jeopardise their high moral ground which they had gained.
  • Consequently, the global community would lose an important opportunity to ensure that vaccines and medicines are accessible to all.

 

Indigenization of Technology (GS 3)

Perfect Semiconductor Chip (Business Line, 23rd March 2022)

Author: – Sanjay Gupta

Roadblocks to Chip Manufacturing

  • It is not only the huge initial investment that acts as a bottleneck but the tenure to even reach break-even makes it unattractive for many players
  • A single chip requires hundreds of liters of pure water, which may be difficult to come by in sufficient amounts in our topography
  • One of the most important components of semiconductor manufacturing is a consistent and stable electrical supply.
  • The process starts with a common material, like sand, and finishes with advanced circuitry made up of many transistor.
  • The semiconductor industry works on separate steps like silicon plant, water fabrication, test, and assembly for developing a perfect chip.

Suggestion to Break the Barriers

Infrastructure

  • Infrastructure is critical to supply chain strategy, and it must incorporate capacity planning, logistics, and manufacturing outsourcing.

Power Semiconductors

  • The Power Management Integrated Circuits (PMICs) and System Basis Chips (SBCs) help in developing designs for developing automotive, industrial, or consumer application.
  • The integrated and cost-effective controllers will address a full range of AC-DC power conversion applications .

Barrier of Clean Energy

  • India has been one of the fastest-growing solar PV markets in recent times.
  • Out of the 10 largest solar plants under construction in 2018, five were spread across different States in India, making the country a prime market for efficient PV inverters.
  • Gallium Nitride (GaN) and Silicon Carbide (SiC) based devices hold the key to addressing a primary hurdle for expansion of renewable energy.
  • These provide scalable power conversion and storage solutions.

 

 

Requirement of Water

  • Large quantities of water for a variety of purposes ranging from equipment cooling to wafer surface cleaning.
  • Ultrapure water is required in these stages as it is used for surface cleaning.
  • The conversion of raw water to water of ultrahigh purity is thus a significant and costly activity for all semiconductor fabs
  • A typical 200 mm wafer fab that processes 20,000 wafers per month can use up to 3,000 m3 of UPW per day
  • Government policies must focus on assuring and securing access to foreign technology suppliers.
  • This requires calibration in trade and foreign policy 

Question From Editorial

  • “It is much easier to sign a cheque than to look into one’s conscience and change one’s behavior”. Evaluate this statement in context of Corporate Ethics. (250 words)

OR

  • What do you understand by the Genocide Convention? What is the reading of ICJ into the Russia Ukraine Conflict? (250 Words)

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