EC deletes 111 ‘Non-existent’ Parties from List

The Election Commission has ordered the deletion of 111 registered unrecognized political parties that it found to be “non-existent” and referred three of the parties to the Department of Revenue for legal action for “serious financial impropriety”.

What is the news?

The Representation of the People Act, 1951 provides ECI to register and de-register the political parties.

This was the second such action in the recent past against registered parties that have been found violating the RP Act, 1951.

Registering a Political Party

The registration of all political parties is governed by the provisions of the Representation of the People Act, 1951.

According to the Election Commission (EC), any party seeking registration has to submit an application to the Commission within a period of 30 days.

This is done as per guidelines prescribed by the EC in exercise of the powers conferred by Article 324 of the Constitution and Section 29A of the RP Act, 1951.

Why registering with the EC is important?

It is not mandatory to register with the Election Commission.

However, registering as a political party with the EC has its advantage in terms of intending to avail itself of the provisions of the RP Act, 1951.

The candidates set up by a political party registered with the EC will get preference in the matter of allotment of free symbols vis-à-vis purely independent candidates.

More importantly, these registered political parties, over course of time, can get recognition as a ‘state party’ or a ‘national party’.

How EC recognizes a political party as a state or national party?

For recognition as a NATIONAL PARTY, the conditions specified are:

a 6% vote share in the last Assembly polls in each of any four states, as well as four seats in the last Lok Sabha polls; or

2% of all Lok Sabha seats in the last such election, with MPs elected from at least three states; or

recognition as a state party in at least four states.

For recognition as a STATE PARTY, any one of five conditions needs to be satisfied:

two seats plus a 6% vote share in the last Assembly election in that state; or

one seat plus a 6% vote share in the last Lok Sabha election from that state; or

3% of the total Assembly seats or 3 seats, whichever is more; or

one of every 25 Lok Sabha seats (or an equivalent fraction) from a state; or

an 8% state-wide vote share in either the last Lok Sabha or the last Assembly polls.

‘Black Swan’ Event

A study by the Reserve Bank of India (RBI) has spoken about the possibility of capital outflows to the tune of $100 billion (around Rs 7,80,000 crore) from India in case of a major global risk scenario or a “black swan” event.

What is a ‘black swan’ event?

A black swan is a rare, unpredictable event that comes as a surprise and has a significant impact on society or the world.

These events are said to have three distinguishing characteristics –

they are extremely rare and outside the realm of regular expectations

they have a severe impact after they hit and

they seem probable in hindsight when plausible explanations appear

When did the term originate?

The black swan theory was put forward by author and investor Nassim Nicholas Taleb in 2001, and later popularised in his 2007 book – The Black Swan: The Impact of the Highly Improbable.

It is described as one of the 12 most influential books since World War II.

In his book, Taleb does not try to lay out a method to predict such events, but instead stresses on building “robustness” in systems and strategies to deal with black swan occurrences and withstand their impact.

Behind the metaphorical name

The term itself is linked to the discovery of black swans.

Europeans believed all swans to be white until 1697, when a Dutch explorer spotted the first black swan in Australia.

The metaphor ‘black swan event’ is derived from this unprecedented spotting from the 17th century, and how it upended the West’s understanding of swans.

When have such events occurred in the past?

Interestingly, Taleb’s book predated the 2008 global financial crisis – a black swan event triggered by a sudden crash in the booming housing market in the US.

The fall of the Soviet Union, the terrorist attack in the US on September 11, 2001, also fall in the same category.

Is the Covid-19 pandemic a black swan event?

Taleb does not agree with those who believe it to be one.

Rather, he called it a “white swan”, arguing that it was predictable, and there was no excuse for companies and governments not to be prepared for something like this.

While the outbreak of any pandemic is difficult to individually predict, the possibility of one occurring and having a major impact on systems around the world was known and documented.

Major reforms in Banks Board Bureau (BBB)

The Union Finance Ministry is working to expand and relaunch the Banks Board Bureau (BBB) by bringing in more representatives from the insurance sector.

What is Banks Board Bureau (BBB)?

Banks Board Bureau (BBB) is an autonomous body to Promote excellence in Corporate Governance in Public Sector Financial Institutions.

The BBB works as step towards governance reforms in Public Sector Banks (PSBs) as recommended by J. Nayak Committee.

It was formed in 2016 to select executive directors, and managing directors and chief executives of state-run banks.

It is tasked to search and select personages for Board of Public Sector Banks, Public Sector Financial Institutions and Public Sector Insurance Companies and recommend measures to improve Corporate Governance in these Institutions.

It has been selecting directors and chairmen and managing directors of PSU general insurance companies since 2018.

Its establishment

The Central Government notified the amendment to the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980.

It provided the legal framework for composition and functions of the Banks Board Bureau on March 23, 2016.

The Bureau accordingly started functioning from April 01, 2016 as an autonomous recommendatory body.

Functions of BBB

The mandate of the Bureau is to advise the Central Government on –

Selection and appointment of Board of Directors in Nationalised Banks, Financial Institutions and Public Sector Insurance Companies (Whole Time Directors and Chairman)

Matters relating to appointments, confirmation or extension of tenure and termination of services of the Directors of mandated institutions

Desired management structure of mandated institutions, at the level of Board of Directors and senior management

Suitable performance appraisal system for mandated institutions

Formulation and enforcement of a code of conduct and ethics for managerial personnel in mandated institutions

To build a data bank containing data relating to the performance of mandated institutions and its officers

Evolving suitable training and development programs for managerial personnel in mandated institutions

To help the banks in terms of developing business strategies and capital raising plan and the like;

Any other work assigned by the Government in consultation with RBI

Why such move?

The revamp is, in part, pushed by a Delhi High Court order last year.

It observed that the bureau was not a competent body to recommend appointments at PSU general insurers.

It held that circulars enabling BBB to select general managers and directors of PSU insurers were not legally valid.

Reasons behind the revamp

FM aims to legally empower the body to recommend candidates for public sector insurers, and accelerate top-level hiring at all state-run financial institutions.

The ministry plans to identify new members, restructure the bureau, and refer the new names to the appointments committee of the cabinet (ACC) in a couple of months.

The revamped BBB may also get a new name to indicate its remit over a wider set of financial institutions.

Significance

A revamp of the BBB will enable it to recommend full-time appointments at financial institutions where the current executives are given additional charge through interim arrangements.