As of January 2017, the sanctioned strength of the seven CAPFs was 10,78,514 personnel. However, 15% of these posts (1,58,591 posts) were lying vacant. Data from the Bureau of Police Research and Development shows that vacancies in the CAPFs have remained over the years. Table 1 shows the level of vacancies in the seven CAPFs between 2012 and 2017. 
The level of vacancies is different for various police forces. For example, in 2017, the Sashastra Seema Bal had the highest level of vacancies at 57%. On the other hand, the Border Security Force had 2% vacancies. The Central Reserve Police Force, which account for 30% of the sanctioned strength of the seven CAPFs, had a vacancy of 8%.
How often are CAPFs deployed?
According to the Estimates Committee of Parliament, the number of deployment of CAPFs battalions has increased from 91 in 2012-13 to 119 in 2016-17. The Committee has noted that there has been heavy dependence by states on central police forces even for day-to-day law and order issues. This is likely to affect anti-insurgency and border-guarding operations of the Forces, as well as curtail their time for training. The continuous deployment also leaves less time for rest and recuperation.
The Estimates Committee recommended that states must develop their own systems, and augment their police forces by providing adequate training and equipment. It further recommended that the central government should supplement the efforts of state governments by providing financial assistance and other help for capacity building of their forces.
What is the financial allocation to CAPFs?
Under the Union Budget 2018-19, an allocation of Rs 62,741 crore was made to the seven CAPFs. Of this, 32% (Rs 20,268 crore) has been allocated to the Central Reserve Police Forces. The Estimates Committee has pointed out that most of the expenditure of the CAPFs was on salaries. According to the Committee, the financial performance in case of outlays allocated for capacity augmentation has been very poor. For example, under the Modernization Plan-II, Rs 11,009 crore was approved for the period 2012-17. However, the allocation during the period 2013-16 was Rs 251 crore and the reported expenditure was Rs 198 crore.
What are the working conditions for CAPFs personnel?
The Standing Committee on Home Affairs in the year 2017 had expressed concern over the working conditions of personnel of the border guarding forces (Border Security Force, Assam Rifles, Indo-Tibetan Border Police, and Sashastra Seema Bal). The Committee observed that they had to work 16-18 hours a day, with little time for rest or sleep. The personnel were also not satisfied with medical facilities that had been provided at border locations.
In addition, the Standing Committee observed that personnel of the CAPFs have not been treated at par with the Armed Forces, in terms of pay and allowances. The demand for Paramilitary Service Pay, similar to Military Service Pay, had not been agreed to by the Seventh Central Pay Commission. Further, the Committee observed that the hard-area allowance for personnel of the border guarding forces was much lower as compared to members of the Armed Forces, despite being posted in areas with difficult terrain and harsh weather.
What is the status of training facilities and infrastructure available to CAPFs?
The Estimates Committee has noted that all CAPFs have set up training institutions to meet their training requirements and impart professional skills on specialised topics. However, the Committee noted that there is an urgent need to upgrade the curriculum and infrastructure in these training institutes. It recommended that while purchasing the latest equipment, training needs should also be taken care of, and if required, should be included in the purchase agreement itself. Further, it recommended that the contents of training should be a mix of conventional matters as well as latest technologies such as IT, and cyber security.
According to the Estimates Committee, the MHA has been making efforts to provide modern arms, ammunition, and vehicles to the CAPFs. In this regard, the Modernization Plan-II, for the period 2012-17, was approved by the Cabinet Committee on Security. The Plan aims to provide financial support to CAPFs for modernisation in areas of arms, clothing, and equipment.
However, the Committee observed that the procurement process under the Plan was cumbersome and time consuming. It recommended that the bottlenecks in procurement should be identified and corrective action should be taken. It further suggested that the MHA and CAPFs should hold negotiations with ordnance factories and manufacturers in the public or private sector, to ensure an uninterrupted supply of equipment and other infrastructure.
Cryptocurrency is a specific type of virtual currency, which is decentralised and protected by cryptographic encryption techniques. Bitcoin, Ethereum, Ripple are a few notable examples of cryptocurrencies. Decentralisation implies that there is no central authority where records of transactions are maintained. Instead, anyone can create a transaction. This transaction data is recorded and shared across multiple distributor networks, through independent computers as shown in Figure 1. This technology is known as Distributed Ledger Technology.
Figure 1: Distributed Ledger Technology
The Committee noted that there are two principal ways in which cryptocurrencies are raising money. First, through Initial Coin Offerings, where digital tokens are issued in exchange for other currencies. Second, through using it as a means of exchange or a payment system. As of February 2019, there were more than 2,000 cryptocurrencies across the world, with a market capitalisation of approximately USD 120 billion.
Why has the Committee recommended banning of cryptocurrencies?
The Committee noted various regulatory concerns around virtual currencies, and cryptocurrencies in particular. These include:
Fluctuation in prices: Cryptocurrencies are subjected to market fluctuations and the lack of a centralised authority makes it difficult to regulate them. For instance, in December 2017, the value of Bitcoin cryptocurrency was around USD 20,000 per coin, which reduced to USD 3,800 per coin by November 2018. The Ministry of Finance, in a press statement, noted that the price of virtual currencies is a matter of mere speculation resulting in spurt and volatility in their prices.
Risk to consumers: The Committee also noted that there are several vulnerabilities in the design of cryptocurrencies which leave consumers open to risk of fraud. These include phishing cyber-attacks and ponzi schemes. For instance, a Rs 2,000 crore ponzi scheme was unveiled in April 2018. Further, cryptocurrency transactions are irreversible, which means once a transaction is done, there is no way to remedy it.
Impact on power consumption: The Committee also observed that cryptocurrencies can have unfavourable consequences on India’s energy demand. Validating transactions in a distributed network involves high electricity consumption and requires high computation power. The Committee noted a study which estimated that 19 households in USA can be powered for one day by the electricity consumed in a single transaction of bitcoin cryptocurrency.
Potential use for criminal activity: The Financial Action Task Force, an intergovernmental organisation to combat money laundering, in its report (2014) observed that virtual currencies provide greater anonymity than traditional payment methods. This makes them more vulnerable to money-laundering and illicit funding for terror financing. The Committee noted that the decentralised nature and the anonymity which cryptocurrencies provide makes it difficult for law enforcement authorities to track down people involved in illicit activities.
Is there any country which has permitted use of cryptocurrencies?
Different countries have adopted different regulatory frameworks with respect to cryptocurrencies. Some countries have permitted the use of cryptocurrencies as a payment system while there is a complete ban on cryptocurrencies in some others. Note that no country has allowed use of any virtual currency as legal tender.
Table 1: Regulatory framework for cryptocurrencies in different countries
|
Country |
Regulatory Framework |
|
Canada |
Permitted as a payment system and as a form of investment, income from it is taxed |
|
Switzerland |
Permitted as a payment system (including consumer to government transactions) and as a form of investment |
|
Japan |
Permitted and regulated as a payment system |
|
China |
Use of cryptocurrency is banned for all purposes |
What are the present regulations in India with respect to cryptocurrencies?
In the last few years, the Reserve Bank of India (RBI) has notified the potential financial, operational, legal and security risks related to cryptocurrencies on multiple occasions (December 2013, February 2017 and December 2017). In December 2017, the Ministry of Finance issued a statement which clarified that virtual currencies are not legal tender and do not have any regulatory permission or protection in India. Further, the investors and participants dealing with them are doing so entirely at their risk and should best avoid participating. In the 2018-19 budget speech, the Finance Minister announced that the government does not consider cryptocurrencies as legal tender and will take all measures to eliminate their use in financing illegitimate activities or as a part of payment system. In April 2018, RBI notified that entities regulated by it should not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling virtual currencies.
How does the draft Bill proposed by the Committee change these regulations?
Currently, only the entities regulated by the central bank are prohibited from dealing in, or providing services for dealing in virtual currencies. The draft Bill prohibits any form of mining (creating cryptocurrency), issuing, buying, holding, selling or dealing in cryptocurrency in the country. Further, it provides that cryptocurrency should not be used as legal tender or currency in India. The Bill allows for the use of technology or processes underlying cryptocurrency for the purpose of experiment, research or teaching.
The Bill also provides for offences and punishments for the contravention of its provisions. For instance, it states that mining, holding, selling, issuing or using cryptocurrency is punishable with a fine, or imprisonment up to 10 years, or both. For individuals who might be in possession of cryptocurrencies, the Bill provides for a transition period of 90 days from the commencement of the Act, during which a person may dispose of any cryptocurrency in their possession, as per the notified rules.
Are there any areas where the Committee recommended use of cryptocurrencies?
According to the Committee, while cryptocurrencies or virtual currencies do not offer any advantages, the underlying technology behind them (Distributed Ledger Technology, DLT) has many potential applications, both in finance and non-finance sectors. Some of these are listed in Table 2. The Committee observed that DLT makes it easier to identify duplicate transactions, and therefore can be utilised for fraud-detection, processing KYC requirements, and claim management for insurance. Further, it can be helpful for removing errors and frauds in land markets, if used for maintaining land records. The Committee was also of the view that the idea of an official digital currency in India can be explored further, and that the government may setup a group to examine and develop an appropriate model of digital currency in India.
Table 2: Applications of Distributed Ledger Technology
|
Sector |
Possible uses of DLT |
|
Payments |
Faster and cheaper cross-border payments Reduced transaction cost for micro-payments |
|
Identification |
Storing personal records such as birth, marriage or death certificates Removing duplicates in identification platforms such as KYC |
|
Insurance |
Fraud detection and risk prevention Claims prevention and management |
|
Ownership registries |
Removing errors and frauds in land markets Administrative ease of maintaining land records |
|
Trade Financing |
Reduced operational complexity and transaction costs |