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Author: Er S

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For upstream companies: Exemption of petro products from GST to push up cost of production

Note4Students:
Mains Paper 3: Economy | Mobilization of resources

The news card discusses inclusion of imported inputs for purposes of oil and gas refining in tax-net and its possible results.

From UPSC perspective, following things are important: Prelims level: GST, Input tax credit Mains level: Effects of GST on various sectors of economy

News:
• Keeping petroleum products such as petrol, diesel, natural gas out of the ambit of the Goods and Service Tax (GST) is expected to result in higher cost of production
• This will be for upstream companies such as oil and gas exploration firms as well as for downstream refining companies
• For the end-consumer, this exclusion from GST, however, is unlikely to result in any significant increase in prices

Inclusion/Exclusion:
• The output of upstream and downstream companies have been kept out of the GST
• The inputs that go into their making is subject to levy of GST
• For instance, an oil or gas refiner that imports inputs such as gases, platforms, parts of platform, cranes, chemicals etc will have to pay 5 per cent tax under the

GST regime
• All these are tax-free in the current regime Increase in prices + No input tax credit:
• No passing on to customers: Even though the cost of production increases, these can’t be totally passed on to customers such as domestic refineries or exports since the prices of these products are linked to international benchmarks
• Possible migration: Any increase in prices due to higher taxes locally will encourage buyers to scout for international contracts offering similar products at cheaper prices
• For refineries, nearly 70 per cent of their refined products are petrol, diesel, natural gas, aviation turbine fuel (ATF), which are out of the GST net
• Currently, the refineries take input tax credit on almost 80 per cent of the taxes paid
• Now the refineries cannot take credit for inputs that go in for production of petrol, diesel and ATF

Don’t Tax Clean Energy

Note4students
Mains Paper 3: Economy | Mobilization of resources

The newscard has details on the GST Rate Schedule of solar power systems and its modules and panels. The article talks in detail about the implications of the tax and is an important read from UPSC point of view.

Prelims Level: Read the tax slabs for the power systems and its components

Mains Level: Know about the impact of the difference in the taxes on solar energy, how the cess is utilized to write a critical answer on GST.

Context

• The GST Rate Schedule for goods has put ‘solar power generating systems’ and ‘photovoltaic cells whether or not assembled into modules or made into panels’ into different tax brackets

Tax on solar power
• GST rate schedule suggested that all solar power generating systems will be taxed at 5%
• This will be similar to the tax on wind systemsThis would put solar and wind in the same tax bracket as coal
• Coal was previously taxed at 11.69%Nuclear fuel too will be taxed at 5%

The state of confusion
• Another chapter of the GST rate schedule noted that semi-conductor devices including PV cells, which may or may not be assembled into modules or panels, would be taxed at 18%
• The council has put solar panels in the 5% category
• The issue of tax on the remanining components of solar systems remains unresolved even on the eve of the rollout of the new fiscal regime

What will be the impact?
• In the first scenario, utility scale solar (panels and parts), along with other renewable energy sources of electricity as well as coal, is taxed at 5%
• Analysis suggests that GST would result in a minor rise of 1.6% in solar tariffs
• In a thriving solar market, this is unlikely to create any setback for the sector
• While 5% doesn’t seem a mammoth figure, the rise in price of solar power is not insignificant when seen in conjunction with the decline in taxes on coal
• 60% decline in taxation on coal is likely to make thermal power cheaper by as much as Rs 0.15
• This would set back some of the rapid advances made in recent times to close the price gap between the prices of solar power and thermal power
• The cumulative result, with a lower tax bracket for coal and higher (effective) tax implication for solar, would do little to incentivise already apprehensive utilities to purchase more solar power

What about the cess?
• The change in the tax regime would be accompanied by a
change in use for the coal cess
• The cess is currently contributing to the National
Environment Fund (NEF), with a mandate to finance and
promote clean energy initiatives
• It is a carbon tax that will now be redirected
Use of cess:
• Collections from the cess on coal are now expected to be
used to compensate states for the loss of revenue due to
the GST regime
• Between 2010 and 2017, this cess has been used to
make budgetary allocations to the ministries of New and
Renewable Energy; Environment, Forests, and Climate
Change; Water Resources, etc.
• The GST Rate Schedule for goods has put ‘solar power
generating systems’ and ‘photovoltaic cells whether or
not assembled into modules or made into panels’ into
different tax brackets
Tax on solar power
• GST rate schedule suggested that all solar power
generating systems will be taxed at 5%
• This will be similar to the tax on wind systemsThis would
put solar and wind in the same tax bracket as coal
• Coal was previously taxed at 11.69%Nuclear fuel too will
be taxed at 5%
The state of confusion
• Another chapter of the GST rate schedule noted that
semi-conductor devices including PV cells, which may or
may not be assembled into modules or panels, would be
taxed at 18%
• The council has put solar panels in the 5% category
• The issue of tax on the remanining components of solar
systems remains unresolved even on the eve of the
rollout of the new fiscal regime
What will be the impact?
• In the first scenario, utility scale solar (panels and parts),
along with other renewable energy sources of electricity
as well as coal, is taxed at 5%
• Analysis suggests that GST would result in a minor rise of
1.6% in solar tariffs
• In a thriving solar market, this is unlikely to create any
setback for the sector
• While 5% doesn’t seem a mammoth figure, the rise in
price of solar power is not insignificant when seen in
conjunction with the decline in taxes on coal
• 60% decline in taxation on coal is likely to make thermal
power cheaper by as much as Rs 0.15
• This would set back some of the rapid advances made in
recent times to close the price gap between the prices of
solar power and thermal power
• The cumulative result, with a lower tax bracket for coal
and higher (effective) tax implication for solar, would
do little to incentivise already apprehensive utilities to
purchase more solar power

What about the cess?
• The change in the tax regime would be accompanied by a change in use for the coal cess
• The cess is currently contributing to the National Environment Fund (NEF), with a mandate to finance and promote clean energy initiatives
• It is a carbon tax that will now be redirected

Use of cess:
• Collections from the cess on coal are now expected to be used to compensate states for the loss of revenue due to the GST regime
• Between 2010 and 2017, this cess has been used to make budgetary allocations to the ministries of New and Renewable Energy; Environment, Forests, and Climate Change; Water Resources, etc.

[op-ed snap] Why we need nuclear power

Note4students
Mains Paper 3: Economy | Infrastructure: Energy, Ports,
Roads, Airports, Railways etc.
From UPSC perspective, following things are important:

Prelims level: Particulars of the India’s Energy Sector Mains level: The Article gives important points and explains, why nuclear power is important.

News Context
• The Article talks about the need of Nuclear Power in India
• And why renewable energy is important and nuclear option should be retained as an insurance

Why we need nuclear power?
• Because we are short of oil, gas and even coalMore than 70 per cent of petroleum products, 40 per cent of gas and 20 per cent of coal consumption are based on imports
• Our known extractable coal reserves will run out in about 40 years if our coal consumption keeps growing

Particulars of the National Solar Mission 2009
• It was launched with a target of setting up of 20,000 MW of solar plants by 2022
• Innovative policy in the Solar Sector: It was recognised that solar plants would need subsidy through a guaranteed price via feed-in-tariff (FIT) at which solar electricity would be purchased
• FIT is completely Bid based, so that, it does not kill competition
• Success of the FIT: This has worked out beyond expectations
• In the first auction in 2010, when the expected bid was Rs 15 per unit, the bid came to Rs 13.50
• The latest bid in May 2017 asks for a FIT of Rs 2.44 per unit for a 500 MW plant at Bhadla Solar Park 3 in

Rajasthan
• This can be compared with the average rate of Rs 3.20 per unit of coal power generated by NTPC

Why solar power is inadequate?
• In a year, a solar PV(Photovoltaic) plant of one KW capacity generates no more than 2,000 KWh of electricity
• Whereas a coal-based or nuclear plant can generate around 7,000 KWh/year per KW of capacity
• When the sun is not shining, we need some other method of generating power
• It could be coal-based, gas based, nuclear, hydro power or through stored electricity

Why can’t the Hydro Power replace the Thermal or the Nuclear Power Plants?
• India’s potential for hydro power is 150,000 MW at 35 per cent
• The generation of electricity from the river plants during the lean month can be as low as 10 per cent of generation during the peak month
• If the country is to grow at seven or eight per cent till 2050, we will need around 8,000 bkWh
• If we encourage electrical vehicles it could be as much as 12,000 bkWh
• Thus even when we have fully developed our hydro capacity, we will still need balancing power

The Way Forward
• If the cost of battery storage comes down, we can have a system running entirely on solar, wind and limited hydro power
• However, having some nuclear power is needed for the energy security of the country

[op-ed snap] The difficulty of being a farmer

Note4Students:
Mains Paper 3: Agriculture | Issues related to direct and indirect farm subsidies and minimum support prices After reading this op-ed you will be able to fully attempt the below mentioned question.

Q.) Indian farmers are facing multiple crises. Critically analyse the nature of these crises. (200 Words)

From UPSC perspective, following things are important:

Prelims level: Crop insurance programmes, APMC Act, Social welfare programmes, Minimum wage levels.

Mains level: Various problems faced by farmers and suggested solutions.

News:

Context:
• The Indian farmer has always been like an areca nut in a nutcracker—always under pressure from both the supply and the demand sides

Condition of landholdings and irrigation in country:
• Number of farmers: There are about 145 million landholdings in the country. With about 92% of them being wholly owned and self-operated, we may assume that we have about 130 million farmers
• Irrigated vs Rain-fed area: With more than 40% of our cultivated area of 175 million hectares being irrigated, there is a clear distinction between farmers with irrigation and those with rain-fed acreages
• Vulnerability: While farmers who have access to irrigation are better placed, those who are in rain-fed and drought-prone areas are most vulnerable
• More area, less productivity: They occupy 60% of the cultivated area but contribute only 45% of the total agricultural production
• Consequences: These are the farmers without the financial wherewithal to withstand the vagaries of nature. A single crop failure due to drought, flood or similar reasons can destroy them

Problems faced by our farmers:
Crop insurance programmes:
• Crop insurance programmes have not been able to recover farmers’ investments in most cases
• This is due to lack of accurate farm-level data that can be used to settle claims
• Satellite and remote sensing technologies are for the future

Economics of demand and supply:
• Planted acreages have little to no connection with projected demand
• With every recurring phenomenon of high production
that is in excess of demand, there is the consequent (and
drastic) fall in prices
• When a farmer plants a crop, he does not know what the
likely market price of his produce will be
• The government’s minimum support price (MSP) gives
him some direction, but it operates only with some crops
• No commodity-based farmers’ organization:
• In other countries, such organizations advise farmers
on global projections of demand and supply for specific
crops and help in moderating acreages in line with
projected demand
• There is no commodity-based farmers’ organization in
the country to address these issues
• Neither are there platforms for farmers to highlight
issues to key stakeholders such as policymakers, economists and scientists
• Existing farmer organizations are aligned with political or other special interest groups
High-input cost of farm labour:
• The cost of labour has risen due to social welfare
programmes and minimum wage levels
• Also, the problem is the availability of labour at the right
time and at the right cost
• At peak times, like sowing, transplanting, harvesting, etc.,
it is very difficult to get sufficient farm labour
• One solution to address this is greater reliance on
technology
• It can be through farm mechanization, the use of
weedicides or genetic engineering, that can lower input
and time costs

• Farmers should be encouraged to use such labour-saving options instead of being burdened with the social objective of protecting rural employment and being denied access to new technology
• Agricultural Produce Market Committee Act
• APMC Act prohibits farmers from selling their produce in any mandi (grain/commodity market) other than their designated one
• This makes farmers vulnerable to middlemen and vested interests.
• They are exposed to global prices but are not provided
with access to cost-efficient technologies and information
systems
• Karnataka has united all mandis in the state on an
electronic platform and this has reportedly improved
farmers’ selling prices by 38%
• This should be replicated nationally
• Agricultural extension system:
• It has collapsed in many parts of the countryThe farmer
is forced to depend on the advice of agri-input dealers
and commercial organizations instead
• Some organizations are attempting to use information
and communication technology-based methods to give
technical advice to farmers
• Banks:
• Banks need to get more generous with credit in rural
areas where the stranglehold of private moneylenders
continues to wreak havoc
• Other problems:
• Lack of rural infrastructure, reliable power, cold-storage,
roads and transport systems, etc., continue to cripple
farm operations and increase costs
Suggested solution:
• We need to overhaul our thinking and approach towards
addressing farmers’ challenges which are complicated
and structural in nature
• Waiving farm loans is a lazy option for governments and
a costly option for the banking system

[op-ed snap] Cutting tribunals to size

Note4students
Mains Paper 2: Polity | Statutory, regulatory and various quasi-judicial bodies.
From UPSC perspective, following things are important:

Prelims level: Basic knowledge of the Tribunals involved Mains level: The entire controversy shows the non-debatable side of the Money Bills. As on the Money Bills, Lok Sabha has more power than Rajya
Sabha.

News

Context

• The article is about the controversy over the Finance Bill, 2017
• And the legality of the merger of several tribunals

The Finance Bill, 2017
• It is being passed as a money billWhat is there in the bill: The Bill included amendments to legislation on multiple subjects, in an attempt to rationalise the functioning of multiple tribunals

Rationalisation of the Tribunals
• Due to merger, the number of tribunals has decreased to 19 from 26
• Merger: the Competition Appellate Tribunal will be merged with the National Company Law Tribunal
• The Telecom Dispute Appellate Tribunal will also do the work of the Cyber Law Appellate Tribunal and and the Airports Economic Regulatory Authority Appellate Tribunal
• The tribunal relating to the Employees’ Provident Fund will be subsumed in the Industrial Tribunal
Now, more control rests with the Central Government
• Under the Section 184 of the Finance Act, 2017 (1) the qualifications, (2) tenure, (3) conditions of service,
(4) removal and emoluments of the chairpersons and members of these tribunals will all be under the control of the Centre Controversy
• The Madras Bar Association has challenged in the Madras High Court the validity of the amendments in the  Finance bill, 2017
• Controversy over : The process(Implemented through the recent amendments) through which adjudicatory bodies under different laws can be abolished by a money bill
• And, the Centre taking over the entire process of removing the presiding officers

[op-ed snap] Finessing data collection

Note4students
Mains Paper 3: Economy | Development and employment

From UPSC perspective, following things are important:

Prelims level: Different Surveys on employment

Mains level: Article gives an overview of the basics that have to be addressed while preparing employment data.

It will help in implementing various unemployment related policies of the government.

News Context
• New task to NITI Ayog: Generate reliable employment data Present sources of employment statistics in India
• Employment and unemployment surveys (EUS) conducted by the National Sample Survey Office (NSSO) till 2011-12 at an interval of five years and annually with a thin sample
• Annual and sub-annual EUS by the Labour Bureau since 2011-12
• The Census of India conducted every 10 years

Why we need new Statistics?
• Conditions are changing and new challenges need to be addressed (gyaan wala point!)
• Also, there is a need to fill data gaps while working on statistics (main point)

What kind of challenges need to be addressed?

• Detailed information on informal workers — their earnings, and their working and living conditions
• Reduction of the time lag between the survey and release of data
• Conduct short-term surveys for quick assessment of the impact of different policies on employment

Data gaps to be filled in
• Data on district-level employment for decentralised planning, data on circular migrant workers
• Working and living conditions of women labour

How Time-use surveys (TUS) complement the labour force survey?

In two major ways
• First, they can reduce underestimation of the workforce/labour force. This a major weakness of our employment statistics

• TUS collects comprehensive information on how people spend their time on different activities

• Second, under-reporting of workers due to the biases of investigators or of respondents will be tackled

Suggestion for the Task force(of NITI Aayog)
• Take note of the Resolution by International Labour Organization (ILO, 2013) on Statistics of Work, Employment and Labour Underutilisation
• Why? This resolution intends to set new standards for work statistics to guide countries in updating and integrating their existing statistical programmes in the field
• How does resolution define ‘work’? Work = Any activity performed by persons of any sex and age to produce goods or to provide services for use by others or for own use (this definition is consistent with the concept of General Production Boundary under the System of National Accounts)
The way forward
• All countries including India are expected to develop their own system of work statistics
• A TUS is expected to supplement the labour force data to implement the resolution(given above)
• Finally, the task force should recommend modifications in a manner that comparability with old and new data is maintained
• The new data should not be used to hide the declining rate of growth of employment of recent times

From July 1, PAN must be linked to Aadhaar

Note4students
Mains Paper 3: Economy | Mobilization of resources
The newscard has details on linking Aadhaar and PAN card. Read the newcars in the following context:

Prelims Level: Make note of the name of the Act, the benefit

Mains Level: Not very Mains heavy newscard Context
• All those allotted permanent account number (PAN) as
on July 1 will have to link it with their existing 12-digit biometric Aadhaar number

• Those applying for a new PAN will have to also mandatorily quote their Aadhaar number or Aadhaar enrolment ID

The Finance Act
• Both Aadhaar and PAN have already been made mandatory for filing tax returns, opening of bank accounts and financial transactions over Rs 50,000
• The Finance Act for 2017-18 had made Aadhaar mandatory for filing income tax returns
• It provided for linking of PAN with Aadhaar Benefit
• Linking Aadhar with PAN is expected to help check tax evasion through use of multiple PAN cards

The SC order
• The Supreme Court had earlier upheld the validity of an Income Tax Act provision
• It made Aadhaar mandatory for allotment of PAN cards and ITR filing

What if your income is below the tax limit?
• If you don’t file income tax return but possess both PAN and Aadhaar then linking the two is compulsory
• Otherwise the PAN will be liable to become invalid from a date to be notified by the government, as per section 139AA of the Act

Govt. unveils new hydrocarbon policy

Note4Students:
Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
Another step in Ease of doing business which will also support Make in India through appraising India’s potential resources. From UPSC perspective, following things are important:

Prelims level: Open Acreage Licensing Policy (OALP), National
Data Repository, India’s sedimentary basins (mark them on map), Hydrocarbon Exploration and Licensing Policy (HELP) Mains level: Development of new policies in petroleum sector and its effect on overall business environment and economy.

News:
• Government has introduced new Open Acreage Licensing
Policy (OALP) and the National Data Repository
• The new oil and gas block licensing policy that is expected
to open up 2.8 million square kilometres of sedimentary
basins to exploration and production activities
Need of data repository:
• The lack of seismic sedimentary basin data had been
hampering the oil and gas exploration and production
sector
• 52% of India’s sedimentary basins had not been
appraised as yet
• The National Data Repository was expected to improve
this situation

Open Acreage Licensing Policy (OALP):
• The OALP, a part of the government’s Hydrocarbon Exploration and Licensing Policy (HELP), gives exploration companies the option to select the exploration blocks on their own, without having to wait for the formal bid round from the Government
• The company then submits an application to the government, which puts that block up for bid
• Initially the applications and related bids for the blocks would be held twice a year —in January and July
• OALP offers single license to explore conventional and unconventional oil and gas resources to propel investment in and provide operational flexibility to the investors.
• This will in turn help reduce imports and increase the
share of gas in the country’s energy mix

Work on progress on Gas trading hub:
• Ministry was working on developing a gas trading hub to
support a robust marketing network
Industry suggestions:
• Steps should be taken to develop a South-East Asian
natural gas hub in India, which would provide a fair price
for domestic natural gas through gas-on-gas competition
• It will also help eliminate price vulnerabilities arising
from the oil-indexed nature of LNG import contracts biometric Aadhaar number
• Those applying for a new PAN will have to also mandatorily quote their Aadhaar number or Aadhaar enrolment ID

The Finance Act
• Both Aadhaar and PAN have already been made mandatory for filing tax returns, opening of bank accounts and financial transactions over Rs 50,000
• The Finance Act for 2017-18 had made Aadhaar mandatory for filing income tax returns
• It provided for linking of PAN with Aadhaar Benefit
• Linking Aadhar with PAN is expected to help check tax evasion through use of multiple PAN cards

The SC order
• The Supreme Court had earlier upheld the validity of an Income Tax Act provision
• It made Aadhaar mandatory for allotment of PAN cards and ITR filing

What if your income is below the tax limit?
• If you don’t file income tax return but possess both PAN and Aadhaar then linking the two is compulsory
• Otherwise the PAN will be liable to become invalid from a date to be notified by the government, as per section 139AA of the Act

[op-ed snap] A Gorkhaland West Bengal could live with

Note4students
Mains Paper 1: Social issues | Regionalism Once You are done reading this op-ed you will be able to attempt the below mentioned
Question? Q.) How should both the Union and West Bengal government should handle longstanding issues such as the demand for a separate state of Gorkhaland in the Darjeeling Hills of West Bengal? Critically examine.

From UPSC perspective, following things are important:

Prelims level: Part I of the Constitution and Article 244A

Mains level: Effective solution for Gorkhaland issue, is given in the article.

News

Context

• The Article is related to the recent agitation for a separate Gorkhaland state in the West Bengal
• In the Article, writer is suggesting a possible solution

A Possible Solution
• A harmonious solution is possible through the creation of an Autonomous State of Gorkhaland within an undivided West Bengal

How can this solution be implemented?
• The Constitution has a provision, using which a small
amendment can enable such a solution
• Article 244 A provides for an autonomous state for
certain tribal areas in Assam with its own legislature and
council of ministers

Chances of success of this possible constitutional experiment

• This experiment can succeed if maximum possible autonomy is vested in the Autonomous State of Gorkhaland by amending Article 244 A or inserting a similar Article in Part VI of the Constitution

The Way Forward
• The role of the main ruling party at the Centre is crucial for bringing about this harmonious solution
• It is also necessary to get the support of other political
parties
• Also, WB should concentrate on bringing its tribal people at par with the socially advanced classes on developmental indicators.
Back2basics
• Part I—The Union and Its territories is a compilation of laws pertaining to the constitution of India as a country and the union of states that it is made of
• This part of the constitution contains the law in the establishment, renaming, merging or altering the borders of the states or union territories
• This part contains four articlesThese articles were invoked when West Bengal was renamed, and for formation of relatively new states such as Jharkhand, Chhattisgarh

Article 244A
• The Twenty-second Amendment of the Constitution of India, officially known as The Constitution (Twenty-second Amendment) Act, 1969, inserted new article 244A in the Constitution to empower Parliament to enact a law for constituting an autonomous State within the State of Assam and also to provide the autonomous State with Legislature or a Council of Ministers or both with such powers and functions as may be defined by that law.

Odisha develops flood forecasting model

Note4students
Mains Paper 3: Disaster Management | Disaster and disaster
management.
From UPSC perspective, following things are important: Prelims level: What is real time flood forecasting model?

Mains level: It is a significant article because Odhisa has become one of the very few states to have developed flood forecasting model. The example of odhisa could be quoted as an
example while writing any answer on flood management in mains.

News
• What: The Odisha government has developed a real time flood forecasting model
• It is developed for the entire Mahanadi river basin for better flood control
• The model is supported by the State Climate Change

Innovation Programme
• Why important: Stating that Odisha is the first State in the country to implement the Climate Change Action

Plan
• Due to its topography, river networks and sub-tropical littoral location, the State was prone to heavy floods, tropical-cyclone-forced rainfall and storm surges

Privilege of legislators: Breach a grey area, harsh punishment rare

Note4Students

Mains Paper 2: Polity | Parliament and State Legislatures – structure, functioning, conduct of business, powers and privileges and issues arising out of these.

The article discusses Privilege provisions in detail. All points should be read carefully as it is a perfect material for framing a Mains question and you won’t need any other source for determining what to write in answer(s).

From UPSC perspective, following things are important: Prelims level: Article 105, 194 of Constitution, Criminal Procedure Code Mains level: All aspects related to parliamentary privileges.

News:

Context:

• On June 21, the Karnataka assembly Speaker ordered the imprisonment of two journalists for a year based on recommendations in two separate reports of its privilege committees
• Though dozens of people are summoned every year before the privileges committees of Parliament and state legislatures on charges of breach of privilege of legislators, it is rare that punitive action like imprisonment has been ordered
• With no codified laws for what constitutes a breach of privilege offence or prescriptions for punishment, this is largely a grey area in legal terms

What provisions of the Constitution protect the privileges of the legislature?
• Article 105 pertains to the powers, privileges, etc, of Parliament, its members and committees
• Article 194, which is identical to 105, protects the privileges and powers of the houses of legislature, their members and committees in the states
• These sections protect the freedom of speech of parliamentarians and legislators
• Insulate them against litigation over matters that occur in these houses, and
• Give powers to define the powers, privileges and immunities of a house, its members and committees

What are the origins of the privileges?
• These are derived from the British House of Commons
• The privileges are reported to have originated when a nascent British parliament was attempting to establish itself in the light of monarchy

What constitutes a breach of privilege?
• These powers and privileges are not codified. There are no clearly laid out rules on what constitutes breach of privilege and what punishment it entails
• In Karnataka, privileges panels often refer to Practice and Procedure of Parliament by M N Kaul to define breach of privilege
• As per book, “It is a breach of privilege and contempt of the House to make speeches or to print or publish any libel reflecting on the character or proceedings of the house, its committees or any member of the house relating to his character or conduct as a member of Parliament”

What is the criticism of this provision?
• It is sometimes used to counter media criticism of legislators and as a substitute for legal proceedings
• All persons have a right to trial by a competent, independent and impartial tribunal
• Breach of privilege laws allow politicians to become judges in their own cause, raising concerns of conflict of interest and violating basic fair trial guarantees

What is the procedure in privilege cases?
• All state legislatures have special privilege committees comprising 10 to 12 legislators as members and usually headed by a senior politician from the ruling party
• Whenever a legislator has a complaint he can send a letter to the committee
• These matters can pertain to the sidelining of a legislator by government employees when it comes to projects and initiatives, impolite behaviour by government servants, not being invited to public events etc
• The committee will begin proceedings as per the Criminal Procedure Code
• The accused person is summoned and an inquiry is conducted by the committee and based on findings a recommendation is made to the legislature
• When the matter is tabled in the legislature, a debate can be initiated on the report
• Based on the assertions of the House the Speaker can order the punishment as defined by the privileges committee or order otherwise

Draft National Energy Policy: Niti Aayog suggests to convert CIL subsidiaries into separate companies

Note4students
Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
From UPSC perspective, following things are important:

Prelims level: Particulars of the Policy

Mains level: Important step for achieving energy sufficiency targets.

News
• What: NITI Aayog has Released the Draft National Energy Policy
• Draft of the policy aims to find a way to achieve the energy security targets announced by the government
• Recommendations by NITI Aayog: Niti Aayog has recommended that the seven subsidiaries of India’s largest coal miner Coal India Ltd should be converted into independent companies
• And these subsidiaries be allowed to compete against each other in the open market
• NITI Aayog’s Criticism: Niti Aayog has criticised Coal India setting prices that are significantly higher than the implicit cost of mining by the independent power producers
• NITI Aayog has also pushed for higher production from
private coal miners

Centre may tweak airport tariff rules

Note4Students:
Mains Paper 3: Economy | Infrastructure: Energy, Ports,
Roads, Airports, Railways etc.

There have been multiple changes on policy front to make investments attractive in infrastructure building. News card discusses another such move. From UPSC perspective, following things are important:

Prelims level: Greenfield, brownfield projects, Airports Economic Regulatory Authority (see B2B)

Mains level: Different types of terms associated with infrastructure (Greenfield, brownfield, retrofitting) and various measures t0 make investments attractive and viable in
infrastructure.

News:
• In a bid to make the upcoming greenfield airport projects
attractive for global players, the Civil Aviation Ministry
may amend its regulatory law to fix airport charges in
advance
• Ministry is examining how to amend the Airports
Economic Regulatory Authority of India (AERA) Act
2008
What this would mean?
• If aeronautical charges are captured in the bid document
of the greenfield airport project itself, there would not be
any need for fresh determination of such charges by the
regulator (AERA)
• In addition to land, service standards and airport design,
the bidding document for greenfield airport projects
will specify the airport tariff which will be indexed
“appropriately” to factor in inflation, foreign exchange and interest rates

Importance of the move:
• The move comes at a time when the Centre has given its
in-principle approval to build a second airport for the
National Capital Region (NCR) in Greater Noida’s Jewar
region in Uttar Pradesh
Back2Basics: Airports Economic Regulatory
Authority
• AERA is a statutory body established in 2009 to
determine tariff in respect of airport services provided at
major airports across the country
• The AERA revises tariff every five years, known as
a control period, considering the investment and
expenditure incurred by the airport operator
• The AERA, while determining tariff, keeps into account
capital expenditure, service provided, cost of improving
efficiency, economic and viable operations of major
airports, revenue received from services such as food and
beverages, duty-free shops, advertising and car parking,
among others

Cabinet to consider proposal for outright sale of Air India

Note4students
Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
From UPSC perspective, following things are important:

Prelims level: What is SPV, Structure of the DIPAM

Mains level: A good example of Government’s divestment plan.

Government is seriously considering divestment to get rid off debt problems of its subsidiaries.

News
• What: The Union Cabinet is considering three options to divest the government’s majority stake and considering the creation of a special purpose vehicle (SPV)
• Why: To get rid of a major portion of its more than Rs. 50,000-crore debt
• Three options include: 100% sell-off and stake sale of 74% or 51%, as per the note prepared by the Department of Investment and Public Asset Management (DIPAM)
• View of different ministries/agencies: The NITI Aayog and the Finance Ministry are in favour of an outright sale of Air India
• But the Civil Aviation Ministry is keen that the government continues to remain a stakeholder in the Air India after handing over the management to the private sector
• Proposal of SPV: Government is also considering a proposal to clear up Air India’s liabilities by forming a Special Purpose Vehicle (SPV)
• SPV will take care of a portion of its non-aircraft debt
along with its subsidiaries and real estate assets
• Debt Level: Air India has a total debt of around Rs.
52,000 crore which comprises of Rs. 22,000 crore as
aircraft loan and the remaining as working capital loan
• According to the plan, of the airline’s over Rs. 30,000
crore total working capital loan, Rs. 25,000 crore will be
earmarked for the SPV
Back2basics Special Purpose Vehicle (SPV)
• A special purpose vehicle/entity (SPV/SPE) is a
subsidiary company with an asset/liability structure and
legal status that makes its obligations secure even if the
parent company goes bankrupt
• An SPV/SPE is also a subsidiary corporation designed
to serve as a counterparty for swaps and other credit
sensitive derivative instruments.

Cabinet to consider proposal for outright sale of Air India

Note4students
Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
From UPSC perspective, following things are important:

Prelims level: What is SPV, Structure of the DIPAM

Mains level: A good example of Government’s divestment plan.

Government is seriously considering divestment to get rid off debt problems of its subsidiaries.

News
• What: The Union Cabinet is considering three options to divest the government’s majority stake and considering the creation of a special purpose vehicle (SPV)
• Why: To get rid of a major portion of its more than Rs.50,000-crore debt
• Three options include: 100% sell-off and stake sale of 74% or 51%, as per the note prepared by the Department of Investment and Public Asset Management (DIPAM)
• View of different ministries/agencies: The NITI Aayog and the Finance Ministry are in favour of an outright sale of Air India
• But the Civil Aviation Ministry is keen that the government continues to remain a stakeholder in the Air India after handing over the management to the private sector
• Proposal of SPV: Government is also considering a proposal to clear up Air India’s liabilities by forming a Special Purpose Vehicle (SPV)
• SPV will take care of a portion of its non-aircraft debt
along with its subsidiaries and real estate assets
• Debt Level: Air India has a total debt of around Rs.
52,000 crore which comprises of Rs. 22,000 crore as
aircraft loan and the remaining as working capital loan
• According to the plan, of the airline’s over Rs. 30,000
crore total working capital loan, Rs. 25,000 crore will be
earmarked for the SPV
Back2basics Special Purpose Vehicle (SPV)
• A special purpose vehicle/entity (SPV/SPE) is a
subsidiary company with an asset/liability structure and
legal status that makes its obligations secure even if the
parent company goes bankrupt
• An SPV/SPE is also a subsidiary corporation designed
to serve as a counterparty for swaps and other credit
sensitive derivative instruments.

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