- The government need not restrict the surrogacy option to married couples only
Relevance: mains: G.S paper II: Schemes and policies & G.S paper I: Society and social issues.
The Surrogacy (Regulation) Bill was introduced in the Lok Sabha earlier this month with the intent of facilitating altruistic surrogacy in the country. The Bill stipulates that a surrogate mother has to be a ‘close relative’ of the intending couple. The government claims that regulating surrogacy will put an end to rampant commercialisation of the practice. But in the process, it has left a lot of women from underprivileged backgrounds who lend their wombs worse off. In a conversation moderated by Ramya Kannan, Dr. Kakoli Ghosh Dastidar, West Bengal MP, gynaecologist and fertility expert, and Gita Aravamudan, award-winning journalist with an interest in gender issues and author of ‘Baby Makers: The Story of Indian Surrogacy’ look at the Bill’s shortcomings.
How will the Bill impact surrogacy in the country? Will it increase or decrease the chances for people to choose from the many reproduction options?
KGD: I would like to mention that I have spoken to Union Health Minister Harsh Vardhan. I have also, in fact, written to him that it looks like we are putting the cart before the horse. For surrogacy to happen, we need embryos, and embryos are cultured in various In-Vitro Fertilisation (IVF) laboratories. So, before speaking of surrogacy, we should have brought in the Assisted Reproductive Technology (ART) Bill, which has been lying in cold storage for years now. We should have formulated rules and regulations for ART because there is a mention of ‘donor eggs’ in the Surrogacy Bill; and it is the donor eggs that are used for the IVF procedures. Second, the Bill specifies that the intending couples should be married Indian couples. There is no mention of Non-Resident Indians working or studying abroad who may want to come back home to have a baby. As far as the other provisions go, they are mostly okay, but we need to be able to debate the Bill at length.
Are there any problems with the Bill?
GA: There are a lot of problems. First, as Dr. Kakoli said, we are putting the cart before the horse because there is a whole process involved, and surrogacy is only the ultimate end of it. There are many other points in the Bill that are very problematic. First, it leaves out a lot of people in case they want to have a baby through IVF, including unmarried couples who want to have a baby through surrogacy, gay couples and single men and women.
Also, the Bill allows only altruistic surrogacy; this provision is very problematic as far as I’m concerned. I spent two years with surrogate mothers, clinics and intending couples; what I found is that the people who are lending their wombs in order to bear children for somebody else — they are doing a job which is very creditable because they want to help somebody, but it doesn’t mean that they should put their life on hold for it, or that they should not be paid for it.
Altruistic surrogacy has, in fact, failed in other countries, and has resulted in various other forms of assistance being given, though money may not be paid. If we are going to rely on relatives alone, many may not come forward. Surrogacy should be declared as a kind of profession — the person providing a womb must have a contract, must be paid properly and get insurance and proper medical checks.
Both of you sound quite agitated at the exclusion of certain groups of people.
KGD: I would like to mention here that our group, led by my husband, Dr. Sudarshan Ghosh Dastidar, was the first in the country, possibly globally too, to help a single-male parent have a baby through IVF surrogacy in 2005.
We have been working on IVF since 1986-87, so we have had so many experiences of dealing with people who seek surrogacy. Thus, I strongly speak in favour of transgenders and same-sex couples. I think they should have been included in this Bill.
But as far as the experience of surrogate mothers is concerned, some women had been exploited so much that the government was forced to bring this proposal. The mothers were not being given good food or medical treatment and postpartum care was non-existent.
While in my own experience, I have always dealt with close relatives who came forward as surrogates, I am all for including other groups of people too in the Bill, if couples are unable to, or cannot bear children due to medical reasons. However, I’m strictly against ‘fashion surrogacy’, where women who feel their figure would be disturbed if they carry a baby opt for surrogacy.
GA: In the case of LGBTQI couples and single parents, when medical facilities are available, surrogacy should be allowed, because otherwise how will they have a baby? They will need the womb of a surrogate. Living in has become acceptable now, and live-in couples should also be allowed to have surrogate babies. All these archaic rules, I think, should be shed from the Bill.
Surrogate mothers have indeed been exploited, because there is no process to monitor the clinics or any law to ensure that the mothers are not defrauded by the clinics or the intending couples. The question is, will this Bill manage to ensure a fair and just process?
GA: So, I agree with Dr. Kakoli that there are certain places where surrogates were thoroughly exploited and it was the agents, the middlemen, who did that. However, instead of removing the means of livelihood from them, you should have a contract that all surrogates and the commissioning parents have to sign.
The contract should include details of the payment to be made, specify insurance coverage, and give an assurance that the mothers will be treated properly even in the post-partum stage. I have come across a couple of surrogate homes in Gujarat, in Bengaluru and Hyderabad, where the surrogates are actually treated very well.
Surrogates are actually not very attached to the babies they are carrying in their wombs, because it is a means for them to get a livelihood. If the government can only ensure that everything is done legally, we don’t need this kind of a Bill that is so non-inclusive and superficial, in the sense it doesn’t delve deep into the problems.
So, it seems logical that ART is the key to surrogacy. Is it possible that the ART Bill will be fast-tracked now?
KGD: We are trying to solve the problems by talking, and we are going to discuss this next week. Only at the end of the discussion will we be able to see how many amendments the government has accepted.
If you have a surrogate pregnancy, it should be preceded by an IVF. That is why IVF should be discussed first. IVF clinics have mushroomed all across the country, and malpractices are happening, for instance, in dichotomy or seed-splitting. There are also advertisements where celebrities falsely claim to provide a 100% success rate, whereas the internationally acceptable rate for women is about 35%, and it can never be more than 40%.
We do have, in certain age groups, a 70% success rate; but it might be just 30% for the next age group, so the cumulative rate comes to 35%-40%. But these IVF units are claiming a 100% success, so more patients are going to them. Costs are also going up. While an IVF procedure earlier used to cost less than ₹1 lakh, it now costs ₹4 lakh-₹5 lakh. So, the ART Bill should be tabled before the Surrogacy Bill.
GA: The ART Bill has been in cold storage. But the Surrogacy Bill, which deals with the end of the process, is being touted as very important. It is not. What is important is to take note of the fact that malpractices are taking place in these IVF laboratories, to the extent that somebody else’s embryo can be put into you saying that it is yours. These fly-by-night operators have to be regulated. ART Bill has to be taken up again, and discussed first, after being tabled in Parliament, and passed. Otherwise, are going to have a very messy situation.
Have all points of view been represented in the Bill? Did a consultative process precede the introduction of the Surrogacy Bill?
KGD: When the ART Bill was drafted in the late 1990s, an expert committee was constituted by the Indian Council for Medical Research. It held public debates in all four parts of the country and we involved the public. We put out advertisements in newspapers and asked the public to speak out. Only after this, did the ART Bill come about. Even for surrogacy, the public should have its say, because this is a democracy.
Couples with infertility problems, transgender people, single women, divorced women, and widows should be involved in the public debate and only then should the Bill be brought in.
GA: Exactly! I agree with you on that. The Constitution gives a woman the right to reproduce, or not to reproduce, as she wishes, and she has the right to privacy when she makes her reproductive choices. So, this has to be incorporated into the Bill — If I have a right to reproduce, that means I can hire a surrogate, I can go in for IVF whether I’m a transgender, a lesbian or a divorcee, I have this right as I wish.
A woman who has lent her womb also has these rights.
Any closing remarks?
GA: We need a law, but passing the Surrogacy Bill without looking at the whole process — I think this means we are heading for disaster.
The whole Bill has been drafted without taking into consideration the many physical and emotional factors at stake. Meanwhile, there are many people who don’t know whether or not they can hire a surrogate. There are people who have already hired surrogates. What will happen to their baby? There is a lot of doubt in these areas now.
When the government banned surrogacy for foreigners, some foreigners who were here earlier had already put some embryos in deep freeze thinking that they would come back and have another baby through the viable embryos. Following the ban, they asked for the embryos to be returned. They had gone through a lot to produce a life form, but the government said there can be no export and import of embryos any more. So what will happen to those embryos? You cannot put everything in jeopardy at the last moment, and then say ‘let me think about it and get back to you after a year’. This is a very complicated issue.
(Source: The Hindu)
- Unfortunately, in our Indian tax system, legal disputes ensue because tax laws are not drafted with clarity and are hence misused by tax officers. Such litigation adds to cases in the country’s already overburdened courts.
Relevance: mains: G.S Paper III: Indian economy
An important announcement in the finance minister’s budget speech pertains to the introduction of a system of faceless tax scrutiny assessment. Such an assessment is commendable because in the first place, it means that the assessing officer would not know the taxpayer’s identity and would use only the online filing, and technology platform, to scrutinise the details of the tax payer. Second, there won’t be any personal interaction between the tax payer and the tax officer. This step aims to eliminate corruption in the tax department. However, there are questions over whether faceless scrutiny can end the harassment of taxpayers.
For faceless tax scrutiny to be successful in all respects, the most important rule is that tax rules ought to be drafted with utmost clarity. Unfortunately, in our Indian tax system, legal disputes ensue because tax laws are not drafted with clarity and are hence misused by tax officers. Such litigation adds to cases in the country’s already overburdened courts. Take for example section 115BBDA. Under this section, dividend of more than Rs 10 lakh received by a resident tax payer from domestic or other companies is taxable. However, the online assessment order makes the dividend received by a non-resident taxable as well; dividends from mutual funds are also taxable. Online rectifications are rejected, leaving taxpayers with no option but to file a tax appeal and then wait for years to get justice. Even a brochure issued by the tax department to clarify the issue of taxing non-residents wrongly mentions that such people have to pay tax for a dividend above Rs 10 lakh.
One can give a number of such examples. In the past, section 80HHC was the best example of misinterpretation of tax provisions by tax officers. It meant that almost every taxpayer who availed benefits under the section had to undergo litigation on various grounds. Such cases took years to settle. It is, therefore, more important to draft tax rules with clarity before embarking on faceless tax scrutiny.
The tax department should be more taxpayer friendly. The department’s object should not be to maximise tax revenue by making unlawful additions to the taxable income of tax payers or by denying them timely tax refunds. Even though we follow the online tax assessment system, tax payers are not issued large refunds in time. One receives an assessment order or an order giving effect to tax appeals but refunds are issued at end of the financial year — that too without interest from the date of the order to the date of the issue of refund. So before resorting to faceless scrutiny, it would be desirable to make the current online assessment more taxpayer friendly.
Last year, the CBDT issued a circular stating that the commissioners of appeal will be rewarded for issuing more orders in favour of the department than those in favour of the taxpayers. This was totally uncalled for. It could be construed that the intent of this circular was to pass more unfavourable orders against taxpayers without considering their legality. It is important to fix accountability of tax officers and ensure that they pass assessment orders according to the tax statutes.
In an earlier article in this paper, (Ease of doing investments for NRIs, November 24, 2017), I had written, “It is not easy for NRIs to sell their property in India. After finding the buyer, they have to get a tax clearance under section 195 or 197 for each sale transaction before registering the sale deed. Such deals often fall through due to delay in securing tax clearance.” To avoid harassment of NRI taxpayers, a circular was issued setting a time limit of 30 days to issue a clearance certificate. The process also allowed the submission of online applications with required papers. But that has not been of much help, because of the corruption in the department and the unfriendly attitudes of tax officers. Taxpayers are issued online notices to submit affidavits or papers, which are not relevant to the determination of the tax or the TDS amount.
A person registering a sale deed without obtaining a tax clearance certificate — by accepting a token amount — can be subject to harassment. For example, the tax department can raise an objection for receiving a token amount without the deduction of tax. The tax payer is ultimately left with no choice but to approach the tax officer personally.
At present, tax scrutiny assessments are done online. Tax payers receive notices asking them to submit irrelevant details and papers. They are issued notices stating that the required details have not been submitted in time. Tax payers could be subject to penalty, prosecution or an income tax survey. Even senior citizens are not spared. Facing the threat of a survey, the tax payer approaches the tax officer personally to manage the assessment. Faceless scrutiny will definitely put an end to corruption as the personal interaction between a taxpayer and tax officer will not happen. But before that, the government must ensure that tax officers do not pass unlawful orders online. Tax statutes too need to be drafted with clarity.
(Source: Indian Express)
- The case for a new framework to ensure auditor Independence:
Relevance: mains: G.S paper III: Finance
Auditors in particular and the auditing profession in general have often been portrayed as the main culprits in corporate frauds and failures and alleged to have been in active connivance with the management of the concerned companies. To be fair to such critics, this is natural because of the general understanding of the scope of an audit and an auditor’s proximity to the cause of the fraud or failure, which is usually financial.
Recent high-profile corporate collapses/frauds of the likes of Infrastructure Leasing and Financial Services (IL&FS) in India and of Carillion and BHS in the UK have shaken the Big Four auditors. Regulators are debating measures such as banning these beleaguered firms and amputating the non-audit services rendered by them and are also considering various structural changes in the regulatory framework. The audit regulator in the UK, the Financial Reporting Council, which is akin to the recently set up National Financial Reporting Authority, or NAFRA, in India, is likely to be replaced by an authority accountable directly to the UK Parliament. The role of The Institute of Chartered Accountants of India (ICAI), the regulator for CAs in India, was made peripheral by the operationalization of NAFRA after the Punjab National Bank fraud.
Unfortunately, these and other measures taken in the past have failed to stop accounting and auditing failures as governments and regulators worldwide have shied away from addressing the underlying malaise that compromises the independence of auditors.
An audit is carried out in the public interest. Therefore, the appointment of auditors and determination of their remuneration has to be totally and effectively made independent of the audited company’s management. Any measure short of this, like the one introduced through the Companies Act, 2013, routing the appointment of an auditor through an audit committee, or restrictions on non-audit services provided by the auditor, or requiring auditors to separate their audit and non-audit services through a so-called “Chinese wall”, would be inadequate in ensuring quality audits. It is universally recognized that high-quality technical standards, tools and techniques are effective only if auditors remain independent and objective in their functioning and are able to challenge management decisions.
The present dispensation for the appointment of auditors through an audit committee is under criticism the world over, despite regulatory and legal stipulations on maintaining the independence of such an audit committee. In reality, the “cultural fit” of auditors, the chemistry they share with the management, tends to get precedence in appointment. This way, the ability of auditors to remain objective and professionally sceptical is severely compromised. Public expectations from an audit process being so high, experimentation with and around the existing framework may not be enough to restore trust in audits. Making audit committees directly accountable to regulators, as being explored in the UK, or any attempt to define parameters for hiring an auditor, would not yield the desired results. It is time for radical measures. The markets regulator, the Securities and Exchange Board of India (Sebi), should be made responsible for the selection of auditors of public-interest entities. This could be done by itself or by an independent agency set up for the purpose.
Till a few years ago, the auditors of public sector banks were appointed by the Reserve Bank of India out of a panel prepared by the ICAI, according to prescribed criteria. It soon succumbed to the demands of bank managements for autonomy in the matter. The new mechanism is widely criticized, not least for malpractices, and continues despite the ICAI pleading against it time and again. The UK is also considering the appointment of auditors for FTSE 350 companies by the regulator.
For public interest entities, Sebi or any independent agency may prepare a panel of auditors based on pre-determined criteria and designate them for appointment by the company, following the process required under the Companies Act. This is a novel concept but is possible. Sebi is already empanelling and appointing forensic auditors in suspect entities.
Audit firms clamour for non-audit services to cross-subsidize their audit services, arguing that if they are not able to audit, quality would be the first casualty. The structural or operational separation of audit and non-audit services sounds sufficiently radical. Yet, it may not address issues of independence or conflict of interest. Rather, the solution lies in making audit fees remunerative—indeed, commensurate with the true cost of a quality audit.
What people expect of auditors in terms of scope and skills are on the rise. The audit fees, however, are not. In recent years, fees have actually shrunk under competitive pressure. Audit committees in general have failed to ensure that audit compensation is sufficient to cover the extra work sometimes needed when an auditor discovers things that need close inspection—for example, suspect transactions. It is common knowledge that audit fees for bank branches in some cases do not even cover the cost of junior audit staff deployed. Unfortunately, in the ongoing debate, audit economics is not being talked about.
Audit fees should be based on the complexity involved and work to be done. High quality necessarily leads to an increase in cost, but that is imperative for an audit that can be trusted. Sebi should also warrant disclosures of audit fees, skill sets deployed and hours spent on audits. This would allow us to assess the fees paid in comparison with inflation and increases in the pay packages of senior management, and also with other companies.
Regulators should create an ecosystem where auditors do not have incentives to compromise the integrity and standards they are expected to uphold. Audits serve the public interest and their quality should concern us all.
(Source: Livemint)
- Formal credit more vital than subsidy:
Relevance: mains: G.S paper III: Indian Economy
The RBI has reportedly held banks’ poor credit appraisal responsible for a pile up of bad debt in Mudra loans to small enterprises. The regulator is right to pull up banks. But there is no cause for panic: defaults in Mudra loans are cumulatively smaller than, say, wilful default by a big corporate borrower.
But that, in no way, reduces the urgency for banks to vastly improve their ability to understand small enterprises and their viability and to monitor end use of funds to prevent a further buildup of bad loans under the scheme. Loan disbursals under Mudra have been growing at a fast clip: more than doubled from Rs 1,32,954.73 crore in 2015-16 to Rs 3,11,811.38 crore in 2018-19.
Reportedly, for public sector banks, the bad loans rose to 9.3% of the advances in FY19 from 4.34% in FY17. The NPAs in small loans of up to Rs 50,000 amounted to 12.39%, while the loans above Rs 50,000 and up to Rs 5 lakh amounted to 10.19%. A writeoff is not an option.
These enterprises need access to formal finance more than they need low interest rates. Rightly, the UK Sinha Committee held that Mudra would require enhancement of in-house (or outsourced) capabilities, including underwriting and risk management.
Banks should tie-up with fintech companies that hold promise for financial inclusion. Giving flexibility to fintech companies to work in trade credit makes eminent sense. A vibrant debt market that can invest in subprime bond issues, accompanied by sophisticated risk-mitigation instruments, would allow small companies and financial intermediaries that service them to access funds.
(Source: Economic Times)