8 November 2024 : Indian Express Editorial Analysis

1. CoP For Consensus 

(Source: Indian Express; Section: The Editorial Page; Page: 10)

Topic: GS3 – Environment

Context:

The article discusses the urgent need for equitable and substantial climate finance to support the Global South in combating climate impacts, emphasizing collaboration rather than conflict with the Global North.

What is Conference of the Parties (COP)?

• COP is the annual United Nations (UN) climate meeting
• In 1992, at the Rio Earth Summit, 154 countries signed a multilateral treaty called the United Nations Framework Convention on Climate Change (UNFCCC). 
• It aimed to stabilise greenhouse gas concentrations at a level that would prevent dangerous anthropogenic (human-induced) interference with the climate system.
• The treaty came into force two years later, and since then, countries which are part of the UNFCCC, meet every year at different venues. 
• Today, there are 198 ‘parties’ or signatories of the Convention.
• COP was a result of a strong belief in the power of international agreements to tackle environmental problems
• Policymakers of that era believed in a unified commitment to deal with climate change. 
• Their belief was strengthened by the success of: 
• the 1987 Montreal Protocol, an international treaty designed to protect the ozone layer, and 
• a 1991 bilateral agreement between the US and Canada that helped combat acid rain by limiting the emission of sulphur dioxide (SO2). 
• This led to the inception of UNFCCC.

The Critical Role of Climate Finance for the Global South

• As COP29 approaches, securing substantial climate finance for the Global South has emerged as a top priority. This is a vital endeavor, given that developing regions house some of the most climate-vulnerable communities.
• However, effective climate finance mechanisms should be built on collaboration, not confrontation, between the Global North and Global South.
• The escalating financial requirements of the Global South, estimated at over $1 trillion annually, far outpace the $100 billion promised in 2009. Although the actual climate finance disbursement exceeded $100 billion for the first time in 2022, over half of it took the form of loans, adding financial strain on already burdened economies.
• Developing countries, particularly some of the poorest, often divert as much as 40% of their budgets to debt servicing, leaving little room for climate adaptation or green infrastructure investment.

Financing Challenges: High Capital Costs and Risk Barriers

• One of the fundamental challenges in securing effective climate finance is the high cost of capital, which hinders infrastructure investment. For instance, the cost of financing clean energy projects in India is several times higher than in Germany, due to perceived risk and market conditions.
• In higher-risk regions, such as sub-Saharan Africa, financing costs are even more prohibitive.
• While climate impacts—such as wildfires, floods, and heatwaves—are increasingly evident in wealthy nations, investors remain hesitant to assume the higher risks associated with financing in developing countries.

Climate Justice and the Need for Equitable Contributions

• This lack of accessible, affordable climate finance has prompted widespread frustration, as climate justice demands that the wealthiest and most responsible for emissions contribute more.
• A recent draft of the UN’s New Collective Quantified Goal acknowledges this by proposing that parties with high greenhouse gas emissions and strong economic capabilities should contribute more to global climate funds.
• However, this approach has sparked objections from major economies like China and India, which argue that the responsibility for historical emissions should not disproportionately hinder their growth.
• The BRICS nations have expressed similar concerns, noting that the development paths of emerging economies will be crucial to maintaining global carbon budgets.

Potential Solutions: Improving Returns to Attract Investment

• One path forward for the Global South is to make climate-related projects more attractive by offering higher returns to investors. For example, increasing returns from 12-13% to 17-18% annually could attract more investment by ensuring quicker break-even points and greater profit margins.
• To achieve this, governments could implement tax breaks, innovative revenue-sharing arrangements, or aggregated demand in green industries, such as hydrogen or electrified public transit.
• Although this may lower the government’s revenue per project, it could encourage a higher volume of investment, ultimately offsetting the revenue reduction.

Climate Finance as a Backstop: Unlocking Concessional Financing

• Another approach is to use international climate finance not just for loans or grants but as a backstop to reassure large public and private lenders.
• In India, renewable energy projects are often curtailed, raising concerns for lenders. Providing international funds as guarantees for these projects could mitigate lenders’ risk perceptions and attract concessional financing.
• India’s progressive renewable energy policies make it an ideal candidate for piloting such a backstop mechanism, which could serve as a model for other Global South nations.

Conclusion: A Unified Vision for COP29

• The COP29 platform, known for its capacity to foster negotiation, will require all sides to make concessions. The Global South, despite its resource constraints, may consider extending a measure of compromise to ensure successful outcomes.
• A spirit of mutual generosity could ultimately transform COP29 into a landmark success, driving meaningful climate action and reinforcing a collaborative approach to global climate finance.

What are the Challenges Regarding Climate Finance?

Insufficient Funds: There is a significant gap between the funds needed to address climate change and the actual resources available for climate-related projects and initiatives. Many developing countries and vulnerable communities have limited access to climate finance, hindering their ability to implement adaptation and mitigation measures. Lack of Ambition: Developed countries have been reluctant to commit to the scale of funding necessary to address the climate crisis, particularly in providing grants and concessional finance to developing nations. Transparency and Accountability: There is a need for transparent and inclusive processes to monitor and measure the delivery of climate finance commitments, ensuring that funds are distributed equitably and used effectively. Ensuring Equity and Justice: The distribution and utilisation of climate finance should prioritise equity and justice, taking into account the needs and priorities of the most vulnerable communities and marginalised groups who are disproportionately affected by climate change. Mobilising Private Finance: While public finance from developed nations is crucial, mobilising private sector investment and leveraging innovative financial instruments remain challenges in scaling up climate finance. Capacity Building and Technology Transfer: Climate finance should not only focus on monetary support but also on capacity building and technology transfer to enable developing countries to effectively implement climate action and transition to low-carbon economies. Debt Burdens: The climate finance requirements add to the existing debt burdens of many developing nations, raising concerns about their ability to access and repay loans for climate action. Economic Impacts: The global economic slowdown and competing priorities may make it challenging for developed nations to allocate significant resources towards climate finance.

PYQ: Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (250 words/15m) (UPSC CSE (M) GS-3 2021)

Practice Question:  Securing adequate and equitable climate finance is essential for the Global South to address escalating climate challenges. Discuss the challenges faced by developing nations in accessing climate finance and suggest strategies to enhance effective climate funding. (250 words/15 m)

 

2. Not so eminent domain

(Source: Indian Express; Section: The Ideas Page; Page: 11)

Topic: GS2 – Polity

Context:

The article examines the Supreme Court’s recent ruling in Property Owners Association v State of Maharashtra, which clarifies the scope of the state’s power to acquire private property under Article 39(b) and reasserts judicial review over such redistributive laws.

Nature of Private Property

• The concept of private property has been a cornerstone of legal and economic systems worldwide.
• Private property rights in India have evolved through various constitutional amendments and judicial interpretations. 
• Initially, the ‘right to property’ was a fundamental right under Article 19(1)(f) and Article 31 of the Constitution.
• However, the 44th Amendment in 1978 relegated it to a constitutional right under Article 300A, allowing the state to acquire private property only through due process and with adequate compensation.

The Core Issue: Property Rights vs. Eminent Domain

• The Property Owners Association v State of Maharashtra case spotlights the longstanding tension between individual property rights and the state’s authority to appropriate private property for public use.
• This conflict, dating back to India’s early constitutional years, has historically pitted Parliament against the judiciary. Courts repeatedly struck down laws perceived to infringe on property rights, while Parliament countered with constitutional amendments that progressively curtailed these rights.
• A major shift occurred with the introduction of Article 31C in 1971, which limited judicial review for laws promoting the Directive Principles under Article 39(b) and (c), permitting the state to pursue redistributive policies without concerns about infringing on equality or freedoms.

Defining “Material Resources of the Community”

• The central legal question in this case revolved around the interpretation of “material resources of the community” in Article 39(b), a term historically ambiguous and untested by a definitive ruling.
• The issue arose in the context of the 1986 Maharashtra Housing and Development (MHADA) Act amendment, which empowered the state to acquire decrepit buildings for tenants.
• The court was tasked with determining whether this phrase inherently included private property, making such property acquisition immune from constitutional challenges.
• Past judgments suggested it could, but conflicting opinions in the 1990s led to the convening of a nine-judge bench to settle this matter.

Majority Judgment: A Context-Dependent Approach

• Chief Justice DY Chandrachud, in the majority judgment, concluded that while “material resources of the community” might include private property, it should not automatically encompass all private property.
• Instead, the designation depends on context, guided by factors such as the nature of the resource, its scarcity, and its impact on community welfare.
• This nuanced, case-by-case approach allows flexibility in interpreting which private assets serve a public purpose without universally deeming them as “material resources.”

Divergent Opinions: Broad vs. Nuanced Interpretations

• Justice Sudhanshu Dhulia dissented, asserting that “material resources” necessarily include all private property, reflecting a broader, redistribution-oriented vision of wealth within the Constitution.
• Meanwhile, Justice Nagarathna aligned with the majority but argued that personal belongings should remain exempt, introducing a boundary within the interpretation.
• This departure from earlier “socialist” interpretations, which treated all private property as subject to Article 39(b), suggests a judicial shift in response to evolving economic policies that prioritize a welfare state over full-scale redistribution.

Implications for Judicial Review and Article 31C

• A significant outcome of this case is the expanded role of judicial review. By interpreting Article 39(b) on a case-by-case basis, the court bypasses Article 31C’s original aim to limit judicial interference.
• Rather than accepting an automatic exemption of laws under Article 39(b), the court will now evaluate each law’s alignment with community material resources before granting immunity from review.
• In essence, this judgment reinforces judicial oversight over state actions concerning private property, providing a stronger check on the state’s power of eminent domain.

The Minority Perspective: Parliamentary Primacy in Defining Wealth Distribution

• Justice Dhulia’s dissenting opinion advocates for parliamentary primacy in determining the distribution of resources, arguing that elected representatives are better suited to decide which resources benefit the public.
• His view suggests that the framers intended for private property to be included under “material resources,” thereby entrusting Parliament with the discretion to redistribute wealth in alignment with Article 39(b).
• This opinion underscores a preference for legislative authority over judicial interpretation in socio-economic matters.

Conclusion: A Step Towards Judicial Checks on State Authority

• While the Property Owners Association judgment offers principles rather than a definitive solution, it has set a precedent for future judicial review in property rights cases.
• By mandating a nuanced interpretation of “material resources,” the court has asserted its role in protecting property rights within the framework of public welfare, effectively sidestepping Article 31C’s limitations.
• However, the final resolution on the constitutional validity of the MHADA Act amendment remains pending.
• This case illustrates the complexities of judicial process, echoing the unresolved plight of Mohan Joshi Hazir Ho, where both tenants and landlords alike endure protracted legal battles for justice.

Implications of the Supreme Court Ruling

It underlines the importance of protecting individual property rights while ensuring that resource redistribution serves the public interest in a balanced and justified manner.  Protection of Private Property Against Arbitrary State Acquisition: Supreme Court reinforces the protection of private property against arbitrary State acquisition and underscores the need for a more nuanced approach to resource redistribution.  Economic Shift: The decision reflects a shift towards a more market-oriented economic policy,moving away from the socialist ideologies that influenced earlier rulings. The Supreme Court noted, ‘India’s dynamic economic policies over the past three decades have contributed to the country’s rapid growth, positioning it among the world’s fastest-growing economies. It is expected to have a significant impact on future cases involving property rights and State powers in India.

Practice Question:  Examine the balance between property rights and the state’s power of eminent domain in light of the Supreme Court’s judgment in Property Owners Association v State of Maharashtra (2024). How does the ruling impact the scope of judicial review and the interpretation of ‘material resources of the community’ under Article 39(b)? (250 words/15 m)