Question: Organic farming is catching up in all parts of the world as the produce fetches a higher price for farmers. Are any steps being taken in India to motivate farmers in this regard?
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The Government is about to launch a national mission on organic farming which will lay out a roadmap for adoption of sustainable and cost effective natural farming techniques. Natural farming will be a chemical free farming method in which crops, trees and livestock are integrated. There will be no use of fertilisers because this form of farming will be based on biomass recycling with emphasis on mulching, use of cow dung, etc. There will be complete exclusion of synthetic chemical inputs. The proposed plan aims to open up export avenues to enhance the income of farmers. This would be done by a certification of naturally produced agricultural commodities. Further, some support measures for marketing will be provided by the Government. The Government is formulating this proposal after several discussions with global experts on natural farming practices.
Question: I have learnt that the Indian Government is planning to issue Sovereign Green Bonds. Is there a market for such securities in India?
India presently has a fast growing market for Green Bonds. According to Climate Bonds Initiative, green labelled instruments issued were to the extent of $6.8 billion in 2021. A draft framework is being prepared for Sovereign Green Bonds. These bonds are to be issued for mobilizing resources for setting up green infrastructure. The funds would be deployed for the renewable energy sector and also for electric vehicles to promote green mobility. Funds would also be earmarked for environmentally sustainable farming, waste recycling, waste-to-energy projects, and waste water management. It is expected that the coupon rate on Sovereign Green Bonds will be 10 to 20 basis points lower than conventional securities of comparable maturity.
Question: Issues of insider trading on the Indian stock markets have cropped up from time to time. Is the regulatory authority taking strict action in this regard?
As per current rules, seven different kinds of information are considered to be unpublished price sensitive information (UPSI). These include financial results of the company, dividend declaration, buy back arrangements, expansion plans, amalgamations or mergers, and disposal of shares by a major investor. Any other information which is likely to materially impact share prices is also treated by the Securities & Exchange Board of India as UPSI.
According to Sebi, an insider or a person related to an insider who is in possession of UPSI would be guilty of insider trading if he trades in the company's shares while in possession of the information. However, courts have taken the view that a person is guilty of insider trading only if it can be demonstrated that he had the motive to make illicit gains. The Supreme Court recently held that a person can be convicted of insider trading only if he makes illicit gains by using such information. According to the Court, the actual profit made is immaterial; what is relevant is to establish the motive for trading. If it is to make an illicit gain, the person would be liable to be penalised. The recent decision of the apex court states that mere possession of price sensitive information and trading on the basis of such information are not sufficient to prove insider trading charges. It is important to establish that the intent behind the transaction is to make illicit gains from the insider information in his possession. The Court emphasized that the regulator has to establish the mala fide intent of the accused before penalty can be levied on him.
H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India. Views expressed are his own and do not reflect the newspaper's policy.