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Distribution: weekly

  • How not to deal with recession

    Context

    The Centre is facing a serious financial crisis because of the exigencies created by the pandemic and its own policies. However, monetising assets and cutting down funds to states could aggravate the crisis.

    3 Policies aggravating the crisis

    1) NMP and disinvestment

    • Union Finance Minister, while announcing the National Monetisation Pipeline (NMP), said that asset monetisation is based on the philosophy of creation through monetisation and is aimed at “tapping private sector investment for new infrastructure creation”.
    • Loss of dividend: Disinvestment of profitable Navratna companies will result in a loss of dividend, a major source of income for the Centre.
    • Loss due to tax exemptions: Tax exemptions to the investors will take away another major share of income.
    • Central funds will be squeezed and this, in turn, will have a bearing on state finances.
    • NMP will seriously hurt the interests of the country.

    2) Cutting down funds to States

    • Kerala’s case: The state was getting about 3.92 per cent from the divisible pool in the 1970s and 1980s.
    • It came down to 2.66 per cent and 2.34 per cent in the awards of the 12th and 13th Finance Commissions.
    • The 14th Finance Commission award increased it to 2.45 (2.50) per cent.
    • Now, the 15th Finance Commission has reduced it to 1.92 per cent.
    • This arbitrary cut is a result of the adoption of certain new yardsticks by the commission without considering the state government’s views
    • The 15th Finance Commission’s special grant (RD grant) of Rs 19,800 crore for this year will no longer be available in the coming years.
    • Karnataka and many other states have also suffered because of the policy to reduce the divisible pool share.

    3) Tax exemptions and surcharge

    • Exemptions amounting to Rs 99,842.06 crore were extended to corporate houses in 2019-20.
    • Many taxes on goods were reduced because of electoral compulsions. This reduced central revenues.
    • Along with such tax exemptions, the increased use of cesses and surcharges is responsible for the shrinking of the shareable pool.
    • The shareable resources with the Centre was around Rs 6.8 lakh crore in 2019-20 which has come down to Rs 5.5 lakh crore in 2020-21.
    • All the cesses and surcharges that are not shared with states come to about 20 per cent of the total revenues of the Centre.
    • States have been demanding that this money should be shared with them, particularly while fighting a pandemic.
    • States complaining for resources does not augur well for cooperative federalism.

    Way forward

    • Developing basic infrastructure and the production sector is the only way to face an economic crisis.
    • That should not be done by selling or handing over public assets to private individuals and corporations.
    • We need massive public investment that will help people to form cooperatives and collectives in agriculture and industrial production.
    • Parliament, the National Development Council and the GST Council should discuss this unprecedented situation.

    Conclusion

    We need to find a way out collectively. Handing over the rights on public properties to private individuals will take the country back to the colonial era. This must not be allowed.

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  • NEET

    The Tamil Nadu Assembly has passed a bill exempting the State from the National Eligibility-cum-Entrance Test (NEET) for admission to undergraduate (UG) medical courses.

    About NEET

    The NEET has replaced the formerly All India Pre-Medical Test (AIPMT).

    It is an all-India pre-medical entrance test for students who wish to pursue undergraduate medical (MBBS), dental (BDS) and AYUSH (BAMS, BUMS, BHMS, etc.) courses.

    The exam is conducted by National Testing Agency (NTA).

    TN law: Permanent Exemption for NEET

    • The Bill exempts medical aspirants in Tamil Nadu from taking NEET examination for admission to UG degree courses in Indian medicine, dentistry and homeopathy.
    • Instead, it seeks to provide admission to such courses on the basis of marks obtained in the qualifying examination, through “Normalization methods”.
    • The aim of the Bill is to ensure “social justice, uphold equality and equal opportunity, protect all vulnerable student communities from being discriminated”.
    • It seeks to bring vulnerable student communities to the “mainstream of medical and dental education and in turn ensure a robust public health care across the state, particularly the rural areas”.

    Why TN is against NEET?

    • Non-representative: TN opposes because NEET undermined the diverse societal representation in MBBS and higher medical studies.
    • Disfavors the poor: It has favored mainly the affordable and affluent sections of the society and thwarting the dreams of underprivileged social groups.
    • Exams for the elite: It considers NEET not a fair or equitable method of admission since it favored the rich and elite sections of society.
    • Healthcare concerns: If continued, the rural and urban poor may not be able to pursue medical courses.

    Can any state legislate against NEET?

    • Admissions to medical courses are traceable to entry 25 of List III (Concurrent List), Schedule VII of the Constitution.
    • Therefore, the State can also enact a law regarding admission and amend any Central law on admission procedures.

    Views of the stakeholders appointed by TN

    • A majority of stakeholders were not in favor of the NEET requirement.
    • NEET only worked against underprivileged government school students, and had profited coaching centres and affluent students.
    • NEET had not provided any special mechanism for testing the knowledge and aptitude of the students.
    • The higher secondary examination of the State board itself was an ample basis for the selection of students for MBBS seats.

    A move inspired by a SC Judgement

    • This thinking of the State may be due to the observation made by the Supreme Court in the selection process of postgraduate (PG) courses in medicine.
    • The Medical Council of India (MCI) had prescribed certain regulations providing reservations for in-service candidates.
    • The Supreme Court struck down regulation 9(c) made by the MCI on the ground of the exercise of power beyond its statute.

    Not a similar case

    • It must be remembered that the Supreme Court was only dealing with a regulation framed by the MCI.
    • The requirement of NEET being a basic requirement for PG and UG medical courses has now been statutorily incorporated under Section 10D of the Indian Medical Council (IMC) Act.
    • When the Tamil Nadu government issued an order in 2017 providing for the reservation of 85% of the seats for students passed out from the State board it was struck down by the Madras High Court.
    • The introduction of internal reservation for government school students is under challenge before the Madras High Court. Similarly, NEET as a requirement is also pending in the Supreme Court.
    • Unless these two issues are decided, NEET cannot be removed by a State amendment.

    The bill cannot be passed

    • The present move to pass a fresh Bill on the same lines is most likely to meet the same fate.
    • The President refused to give his assent to this bill.
    • It is significant that no other State in India has sought an exemption from NEET and, therefore, exempting Tamil Nadu alone may not be possible.
    • Even among the seats allotted to the State, there is no bar for students from other States from competing or selecting colleges in Tamil Nadu.

    The bigger question

    • The question is not whether the State government can amend a law falling under the Concurrent List.
    • The question is whether the State government can exempt Section 10D of the IMC Act, which is a parliamentary law that falls under the Central List (Entry 66).
    • Moreover, the Supreme Court has also upheld NEET as a requirement.
    • Mere statistics highlighting that a majority of the stakeholders do not want NEET in Tamil Nadu is not an answer for exempting the examination.

    Again, it is State and Centre are at crossroads

    • Normally, a Bill requires assent from the Governor to become a law. Stalin’s contention is that this Bill deals with education, which is a Concurrent List subject.
    • Admissions to medical courses fall under Entry 25 of List III, Schedule VII of the Constitution, and therefore the state is competent to regulate the same.
    • Yet, as far as matters relating to the determination of standards for higher education are concerned, the central government has the power to amend a clause or repeal an Act.
    • So, just the passing of the Bill doesn’t enable the students to get exempted from writing NEET.
    • Already, Union Higher Education Secretary Amit Khare has held that if any State wants to opt out of the exam, it has to seek permission from the Supreme Court.

    Options for Tamil Nadu

    • Data is necessary only when there is power to legislate on the subject concerned.
    • Since the Bill, which will become an Act only after the President’s nod, will come into effect only from the next academic year, the battle for and against the NEET requirement will continue in courts.
    • Hopefully, the courts will determine the legality and have a definite solution to the question of medical admissions within the next year.
    • Till such time, students who wrote NEET will fill the seats under the State quota.

    Way forward: Preventing Commercialization of Medical Education

    • The time may also have come to examine whether NEET has met its purposes of improving standards and curbing commercialization and profiteering.
    • Under current norms, one quite low on the merit rank can still buy a medical seat in a private college, while those ranked higher but only good enough to get a government quota seat in a private institution can be priced out of the system.
    • The Centre should do something other than considering an exemption to Tamil Nadu.
    • It has to conceive a better system that will allow a fair admission process while preserving inter se merit and preventing rampant commercialization.

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  • Four-year moratorium for AGR dues

    In big bang reforms, the Union Cabinet approved a relief package for the telecom sector that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100% foreign investment through the automatic route.

    What is AGR?

    • Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
    • It is divided into spectrum usage charges and licensing fees, pegged between 3-5 per cent and 8 per cent respectively.

    Why is AGR important?

    • The definition of AGR has been under litigation for 14 years.
    • While telecom companies argued that it should comprise revenue from telecom services, the DoT’s stand was that the AGR should include all revenue earned by an operator, including that from non-core telecom operations.
    • The AGR directly impacts the outgo from the pockets of telcos to the DoT as it is used to calculate the levies payable by operators.
    • Currently, telecom operators pay 8% of the AGR as licence fee, while spectrum usage charges (SUC) vary between 3-5% of AGR.

    Why do telcos need to pay out large amounts?

    • Telecom companies now owe the government not just the shortfall in AGR for the past 14 years but also an interest on that amount along with penalty and interest on the penalty.
    • While the exact amount telcos will need to shell out is not clear, as in a government affidavit filed in the top court, the DoT had calculated the outstanding licence fee to be over ₹92,000 crore.
    • However, the actual payout can go up to ₹1.4 lakh crore as the government is likely to also raise a demand for shortfall in SUC along with interest and penalty.
    • Of the total amount, it is estimated that the actual dues is about 25%, while the remaining amount is interest and penalties.

    Is there stress in the sector?

    • The telecom industry is reeling under a debt of over ₹4 lakh crore and has been seeking a relief package from the government.
    • Even the government has on various occasions admitted that the sector is indeed undergoing stress and needs support.
    • Giving a ray of hope to the telecom companies, the government recently announced setting up of a Committee of Secretaries to examine the financial stress in the sector, and recommend measures to mitigate it.

    Issue of lower tariff

    • Currently, telecom tariffs are among the lowest globally, driven down due to intense competition following the entry of Reliance in the sector.
    • The TRAI examines the merits of a “minimum charge” that operators may charge for voice and data services.

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  • Tarballs on Mumbai Coast

    A beach in South Mumbai, saw black oil-emanating balls lying on the shore.

    What are Tarballs?

    • Tarballs are dark-coloured, sticky balls of oil that form when crude oil floats on the ocean surface.
    • Tarballs are formed by weathering of crude oil in marine environments.
    • They are transported from the open sea to the shores by sea currents and waves.
    • Tarballs are usually coin-sized and are found strewn on the beaches. Some of the balls are as big as a basketball while others are smaller globules.
    • However, over the years, they have become as big as basketballs and can weigh as much as 6-7 kgs.

    How are tarballs formed?

    • Wind and waves tear the oil slick into smaller patches that are scattered over a much wider area.
    • Various physical, chemical and biological processes (weathering) change the appearance of the oil.

    Why are tarballs found on the beaches during the monsoon?

    • It is suspected that the oil comes from the large cargo ships in the deep sea and gets pushed to the shore as tarballs during monsoon due to wind speed and direction.
    • All the oil spilt in the Arabian sea eventually gets deposited on the western coast in the form of tarballs in the monsoon season when wind speed and circulation pattern favour transportation of these tarballs.

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  • [pib] Hybodont Shark fossils found in Jaisalmer

    In a rare discovery, teeth of new species of Hybodont shark of Jurassic age have been reported for the first time from Jaisalmer by a team of officers from the Geological Survey of India (GSI).

    Hybodont Shark

    • Hybodonts, an extinct group of sharks, was a dominant group of fishes in both marine and fluvial environments during the Triassic and early Jurassic time.
    • However, hybodont sharks started to decline in marine environments from the Middle Jurassic onwards until they formed a relatively minor component of open-marine shark assemblages.
    • They finally became extinct at the end of the Cretaceous time 65 million years ago.

    Significance of the fossil

    • The newly discovered crushing teeth from Jaisalmer represents a new species named by the research team as Strophodusjaisalmerensis.
    • These sharks have been reported for the first time from the Jurassic rocks (approximately, between 160 and 168 million years old) of the Jaisalmer region of Rajasthan.
    • The genus Strophodus has been identified for the first time from the Indian subcontinent and is only the third such record from Asia, the other two being from Japan and Thailand.
    • It opens a new window for further research in the domain of vertebrate fossils.

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    Back2Basics: Geological time-scale

  • Slide in democratic values, India must work to fix it

    Context

    India has performed poorly in every major global democracy report in the past few years.

    India’s declining performance

    • The Freedom House Index for 2021 pushed India down four points from last year, bringing its score from 71 to 67.
    • V-Dem, the world-renowned think-tank from Sweden, has similarly downgraded India.
    • It has labelled India an “electoral autocracy”.
    • The Economist Intelligence Unit (EIU) study has shown India’s ranking has taken a nosedive from 27 to 53 out of 167 countries.
    • The Reporters without Borders’ Press Freedom Report has placed India 167th out of 183 countries.
    • Freedom House has also given India a score of 2 out of 4 in terms of press freedom.

    Factors pointed out by the rating agencies

    • The country has seen increased pressure being put on human rights organisations and civil rights groups.
    • Journalists and activists have been intimidated and incarcerated, and minorities have been specifically targeted.
    • Hate and polarisation are rampant.
    • The most worrying trend has been the crackdown on freedom of speech, with statistics showing a 165 per cent increase in sedition cases between 2016 and 2019.

    Issues with rejecting of global democratic indexes

    • Indian government sought to challenge the rating of EIU after it released its 2021 report earlier this year.
    • An offer made by the Indian government to supply ‘accurate’ data pertaining to the democratic index was firmly refused by the EIU.
    • Shooting the messenger: This seeming retraction of Indian democratic values in global reports and the Indian indignation regarding it seems to be a clear case of shooting the messenger.
    • Harming democracy: The Indian refusal to acknowledge and remedy them is irreparably harming its democracy.
    • Trying to influence the rating agencies to doctor data to suit us is reprehensible.
    • Difficulty for policymakers: Kaushik Basu, formerly the chief economist of the World Bank, commenting on this episode has said that the tendency of fabricating data to present an alternative image has beset the Indian administration.
    • Not showcasing actual data is making it difficult for policymakers to attempt to remedy the situation.

    Way forward

    •  A committee of secretaries’ meeting on January 30, 2020 discussed how India fared on various important parameters based on 32 internationally recognised indices in order to improve the performance on these indices.
    • The desire to introspect and analyse what needs to be done to improve is correct and laudable.
    •  Let NITI Aayog and all concerned organisations focus on improving our performance in all the declining indicators.

    Consider the question “Ranking of the various agencies shows the declining trend of democratic values in India. What are the reasons for such decline?vSuggest the steps to arrest this decline.” 

    Conclusion

    Instead of denying these rankings and the reports of these agencies, India must work on fixing them.

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  • What is Input Tax Credit?

    The Supreme Court has confirmed a Madras High Court judgment which upheld a fiscal formula included in the Central Goods and Service Tax Rules to execute refund of unutilized Input Tax Credit (ITC) accumulated on account of input services.

    What is Input Tax Credit?

    • Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs.
    • Say, you are a manufacturer – tax payable on output (FINAL PRODUCT) is Rs 450 tax paid on input (PURCHASES) is Rs 300 You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes. See here:

    Pc: Cleartax.in

    The case in discussion

    • The apex court Bench led, by Justice D.Y. Chandrachud, passed the judgment in the face of two contradicting judgments of Gujarat and Madras High Courts on the validity of Rule 89(5) of the Central GST Rules, 2017.
    • Rule 89(5) provides a formula for the refund of ITC, in “a case of refund on account of inverted duty structure”.
    • The Gujarat High Court had held that by prescribing a formula in sub-Rule (5) of Rule 89 to execute refund of unutilized ITC accumulated on account of input services.
    • The Madras High Court, while delivering its judgment declined to follow the view of the Gujarat High Court.

    Answer this PYQ in the comment box:

    Consider the following items:

    1. Cereal grains hulled
    2. Chicken eggs cooked
    3. Fish processed and canned
    4. Newspapers containing advertising material

    Which of the above items is/are exempt under GST (Goods and Services Tax)?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

     

    [wpdiscuz-feedback id=”555s0bzkxm” question=”Please leave a feedback on this” opened=”1″]Post your answers here[/wpdiscuz-feedback]

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  • 50th anniversary of Meghalaya’s Statehood

    The Meghalaya Assembly has given an indigenous touch to the National Anthem ahead of the 50th anniversary of Meghalaya’s Statehood in 2022.

    About Meghalaya

    • Meghalaya meaning “abode of clouds” was formed by carving out two districts from the state of Assam: the United Khasi Hills and Jaintia Hills, and the Garo Hills on 21 January 1972.
    • It was previously part of Assam, but on 21 January 1972, the districts of Khasi, Garo and Jaintia hills became the new state of Meghalaya.
    • It is the wettest region of India, with the wettest areas in the southern Khasi Hills recording an average of 12,000 mm (470 in) of rain a year.
    • About 70 percent of the state is forested.
    • The Meghalaya subtropical forests ecoregion encompasses the state; its mountain forests are distinct from the lowland tropical forests to the north and south.

    Note the chronology of reorganization states in India

    State Formation Year Status prior to the formation
    Andhra 1953 Part of the state of Madras
    Gujarat 1960 Part of the state of Bombay
    Maharashtra 1960 Part of the state of Bombay
    Kerala 1956 State of Travancore and Cochin
    Nagaland 1963 Union territory
    Haryana 1966 Part of Punjab
    Karnataka 1956 State of Mysore was formed in 1953, enlarged Mysore in 1956 which was renamed in 1973.
    Himachal Pradesh 1971 Union Territory
    Manipur, Tripura 1972 Union Territories
    Meghalaya 1972 Autonomous state within state of Assam
    Sikkim 1975 Associate state since 1974 and a protectorate of India before that.
    Mizoram 1987 District of Assam till 1972 and Union Territory from 1972 to 1987.
    Arunachal Pradesh 1987 Union Territory
    Goa 1987 Union Territory
    Uttarakhand 2000 Part of Uttar Pradesh
    Chhattisgarh 2000 Part of Madhya Pradesh
    Jharkhand 2000 Part of Bihar
    Telangana 2014 Part of Andhra Pradesh

     

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  • Places in news: Pilibhit Tiger Reserve

    A herd of around 25 elephants from Nepal’s Shuklaphanta National Park reached the tiger reserve in Uttar Pradesh almost a month back.

    Pilibhit Tiger Reserve

    • Pilibhit Tiger Reserve is located in Pilibhit district of Uttar Pradesh and was notified as a tiger reserve in 2014.
    • It is one of the few well-forested districts in Uttar Pradesh.
    • It forms part of the Terai Arc Landscape in the upper Gangetic Plain along the India-Nepal border.
    • The habitat is characterized by sal forests, tall grasslands and swamp maintained by periodic flooding from rivers.
    • The Sharda Sagar Dam extending up to a length of 22 km is on the boundary of the reserve.
    • The tiger reserve got the first international award TX2 for doubling the tiger population in a stipulated time.

    Try answering this PYQ:

    Q.Consider the following protected areas:

    1. Bandipur
    2. Bhitarkanika
    3. Manas
    4. Sunderbans

    Which of the above are declared Tiger Reserves?

    (a) 1 and 2 only

    (b) 1, 3 and 4 only

    (c) 2, 3 and 4 only

    (d) 1, 2, 3 and 4

     

    [wpdiscuz-feedback id=”kaucolpxf4″ question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

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  • Financial inclusion

    Context

    There are 63.4 million MSMEs in India and 99 per cent of which are micro-enterprises with less than Rs 10 lakh in investment. Financial inclusion and integration is key to bring these businesses into the formal economy.

    Financial integration

    • What is Financial inclusion? On the front of “financial inclusion”, which refers to the accessibility of banking and availability of credit, we have made significant progress.
    • Financial integration:  The journey from inclusion to integration is not only about making products available and accessible, but also about making them relevant, applicable, and acceptable.

    Demand size challenges

    1) Gap between demand and supply of capital

    • Due to a limited risk appetite, low or thin-file data on customers and challenging regulatory oversight, capital remains a constraint in designing bespoke products.
    • Way forward: For India to overcome these challenges, the existing infrastructure must be adapted to our new purpose, providing easy-to-use, customer-centric experiences.

    2) Accessibility

    •  Greater accessibility has major benefits for not only the customer but also the supplier.
    • For example, in rural India, people tend to save in the post office, because of village postal agents collect their savings from their doorstep.

    3) Intelligent product design and delivery

    • Products must be designed and delivered intelligently to meet the customer where they are, and by keeping in mind that they use products to reach their goals.
    • This involves tailoring the products to the needs and income profile of the customer, including being cognisant of their environment, geography, and demography.

    4) Lowering the operating costs

    • In the traditional financial system, the design and distribution cost on financial products at sachet size is high.
    • Financial service providers are consequently dissuaded from attempting to reach rural, financially excluded groups.
    • By using the power of machine learning and cloud infrastructure, we can significantly lower operating costs while offering customers affordable, bespoke financial products.

    5) Demand-side issues: Financial literacy and technology readiness

    • Financial literacy and technology readiness are two critical issues on the demand size.
    • Financial education assists people in making sound financial decisions.

    Consider the question “Benefits of the financial inclusion remain unrealised without financial integration. In light of this, examine the challenge in financial integration in India and suggest the way forward” 

    Conclusion

    It is our responsibility to create an ecosystem for them to deploy this capital of courage.

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