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GS Paper: GS3

  • Purse Seine Fishing Gear: A Questionable Fishing Method

    Fishing

    Central Idea

    • The Supreme Court of India has allowed purse seine fishing gear to be used for fishing beyond territorial waters (12 nautical miles) and within the Exclusive Economic Zone (EEZ) (200 nautical miles) of Tamil Nadu, subject to certain restrictions. However, the interim order is primarily concerned with regulating fishing through administrative and transparency measures rather than addressing conservation measures and obligations mandated by the UNCLOS. The use of purse seine fishing gear poses a threat to traditional fishermen and endangers the livelihoods of these fishermen.

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    Fishing

    What is Seine fishing gear?

    • Seine fishing gear is a type of fishing equipment used to catch fish in large quantities.
    • It consists of a long net that is suspended vertically in the water with the help of floats and weights. The net is then hauled through the water by two boats, which are called seine boats. The boats move towards each other, pulling the net between them and trapping fish in the process.
    • Seine fishing can be done in various ways, including purse seining, beach seining, and boat seining, among others.
    • The type of seine fishing gear used depends on the size of the fish being targeted and the location of the fishing activity.

    About United Nations Convention on the Law of the Sea (UNCLOS)

    • Law of the Sea treaty: UNCLOS is sometimes referred to as the Law of the Sea Convention or the Law of the Sea treaty. It came into operation and became effective from 16th November 1982.
    • Defines rights and responsibilities with respect to oceans: It defines the rights and responsibilities of nations with respect to their use of the world’s oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources.
    • It has created three new institutions on the international scene: International Tribunal for the Law of the Sea, 2. International Seabed Authority, 3. Commission on the Limits of the Continental Shelf

    Fishing

    Conservation and conventions

    • Sovereign rights of coastal states: Under Articles 56.1(a) and 56.1(b)(iii) of UNCLOS, coastal states have sovereign rights to ensure that the living and non-living resources of the EEZ are used, conserved and managed, and not subject to overexploitation.
    • Coastal states discretion: Access to the zone by foreign fleets is also solely within the coastal state’s discretion and subject to its laws and regulations.
    • Total allowable catch in EEZ: In order to prevent overexploitation, coastal States must determine the total allowable catch (TAC) in the EEZ (Articles 61(1) and (2) of UNCLOS) in light of the best scientific evidence available.
    • Conservation of Southern Bluefin Tuna (SBT) 1993: The crux of the SBT is TAC and distribution of allocations among the parties to the SBT, which are very relevant from the angle of conservation of general fishery.

    Did you know?

    • The rise in occurrence of jellyfish indicates rising ocean water temperature.
    • Presence of jellyfish in the area indicates the reduction in the fish population.

    Fishing

    What are the concerns over the move?

    • Regulation is not sufficient: Merely restricting the purse seiner to fish on two days Monday and Thursday from 8 a.m. to 6 p.m. (in the Court order) is not sufficient without regulating the fishing methods used.
    • Insufficient catch for traditional fishermen: International legal efforts are gradually moving in the direction of abandoning the use of large-scale pelagic nets. The huge size of the purse seine nets (2,000 metres in length and 200 m in depth) allows maximum catch for the purse seiners, in turn leaving behind insufficient catch for traditional fishermen.
    • Efforts under TAC might face scientific uncertainty: TAC and the catch quotas are aimed at putting sustainable use into practice among fishermen and maintaining maximum sustainable yield (MSY). The efforts to implement TAC and catch quota might face scientific uncertainty relating to safe limits to ensure MSY.

    Way ahead

    • The Court’s final judgment needs to look into non-selective fishing methods by purse seiners resulting in the by-catch of other marine living species (which could include, many a times, endangered species) a potential ground for trade embargo.
    • The top court should seek guidance from the obligations arising from the multilateral and regional conventions which are meant to bring in sustainable fishing practices over a certain period of time, thereby allowing a common resource such as fish to be naturally replenished.

    Conclusion

    • Despite the best conservation measures and regulation of fishing methods adopted by the authorities, it will be a challenge in dealing with the limitless character of the seas which renders a common resource such as fish available for exploitation by all. The theory of Garrett Hardin, ‘The Tragedy of the Commons’, which says ‘Freedom in a commons brings ruin to all’ should convince all “fishermen, especially the purse seiners of Tamil Nadu, that they must cooperate in complying with conservation measures.

    Mains question

    Q. The Supreme Court of India has allowed purse seine fishing gear to be used for fishing beyond territorial waters. In this backdrop Discuss what is purse seine fishing gear its advantages and the concerns.

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  • Vibrant Villages Programme Gets An Upgrade

    Villages

    Central Idea

    • The Indian government has recently announced a significant allocation of funds to improve infrastructure and living conditions in villages along the Line of Actual Control (LAC) with China. Under a “Vibrant Villages” programme, the government will spend Rs 4,800 crore for infrastructure development and to provide livelihood opportunities in the areas bordering China.

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    What is Vibrant Villages Programme?

    • Improve infrastructure in villages along India’s border with China: The Vibrant Villages program is a government initiative aimed at improving infrastructure and creating job opportunities in villages situated along the Line of Actual Control (LAC) with China.
    • Overview: The program involves a significant allocation of funds, i.e., Rs 4,800 crore, to upgrade 633 villages situated in five states, Himachal Pradesh, Uttarakhand, Sikkim, Arunachal Pradesh, and the Union Territory of Ladakh. Under the programme, residential and tourist centres will be constructed.
    • Objectives of the program: The program aims to enhance the living conditions of the people residing in the border areas and improve the security situation along the LAC with China.
    • Expected Benefits: The Vibrant Villages program aims to provide better facilities like schools, 24×7 electricity, and more 4G telecommunication towers in the border areas to match what is available in settlements across the LAC.
    • Strategy to enhance security: The Vibrant Villages program is part of the broader Indian government strategy to enhance security along the border with China. The investment in developing infrastructure and creating job opportunities is a crucial step towards improving the living conditions of the people in the border areas and enhancing the security situation along the LAC with China.
    • Program is modelled after Chinese actions on LAC: The program is modelled after the Chinese military and civilian authorities’ actions on their side of the LAC to build permanent population settlements along the border.

    Villages

    What is the upgraded plan?

    • Over a third of allocation towards road infrastructure in border areas: The plan is to upgrade 633 villages in Himachal Pradesh, Uttarakhand, Sikkim and Arunachal Pradesh and the Union Territory of Ladakh. Over a third of the allocation will go towards road building in the border areas. A new 4.1 km all-weather tunnel will connect Himachal Pradesh to Ladakh making troops movement easier.
    • Sports and tourism for livelihood opportunities: Tourism and sporting activities are being planned in these areas to provide livelihood opportunities for local people.
    • New battalions of ITBP to deploy on border: Further, the government will spend Rs 1,800 crore to raise seven new battalions of the Indo-Tibetan Border Police (ITBP) that means 9,000 personnel chiefly deployed along India’s borders with China alongside the Army.

    What are the concerns for India?

    • National Security: India has long been concerned about China’s territorial claims and military build-up in the region. The development of Chinese villages along the LAC is viewed by India as a part of China’s broader strategy to strengthen its position in the region, which could pose a threat to India’s national security.
    • Military and Strategic Concerns: India is concerned that the villages built by China along the LAC have a dual purpose, i.e., they serve as civilian settlements as well as military outposts. These villages, therefore, give China an edge in terms of strategic advantage and troop deployment in the region.
    • Incursions and Border Disputes: China has been carrying out frequent incursions into Indian territory in the region, leading to increased tensions between the two countries. The development of Chinese villages along the LAC raises concerns that these could be used as bases for future incursions into Indian territory.
    • Environmental and Ecological Concerns: India has expressed concerns over the environmental impact of China’s development of villages along the LAC, as these areas are ecologically sensitive and prone to landslides, flash floods, and earthquakes. The construction of infrastructure such as roads, tunnels, and buildings can have a severe impact on the environment and ecosystem of the region.

    What are the challenges for developing villages along the LAC?

    • Harsh Terrains: The areas along the LAC are characterized by high-altitude terrain, rugged mountains, and harsh weather conditions. These factors pose significant challenges to the construction of infrastructure and provision of services in these regions.
    • Security Concerns: The LAC border region has been the site of numerous border disputes and conflicts between India and China. Developing villages in this region requires addressing security concerns to ensure the safety of local people and government infrastructure.
    • Environmental Impact: The development of infrastructure and facilities in the border regions could have an adverse impact on the environment, including the degradation of natural habitats and the loss of biodiversity. Mitigating these impacts is necessary for sustainable development in these regions.
    • Cooperation from Local Communities: The success of the Vibrant Villages program depends on the cooperation of local communities in the border regions. Building trust and collaboration with these communities is crucial to the program’s success.

    Conclusion

    • China’s incursion in Arunachal Pradesh highlights the present danger that India faces along the LAC with China. India can no longer afford to waste time as the PLA determines when and where to inflict harm on the country. Developing infrastructure and building vibrant villages is an essential step towards enhancing security and better living conditions in the border areas. Steps taken so far in the right direction however, India requires a more comprehensive defence strategy with an all-of-government approach to ensure its territorial integrity.

    Mains question

    Q. What is Vibrant Villages Programme? Discuss the challenges for developing villages along the LAC?

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  • Govt. likely to place Reverse Charging of GST on Scrap before Council

    gst

    Central idea: The article discusses the possibility of the government presenting the reverse charging of Goods and Services Tax (GST) on Steel and other metal scraps before the GST council.

    Scrap recycling in India

    • India is now the world’s second-largest steel producer, with output expected to increase by 17.8 per cent to 118.1 million tonnes in 2021.
    • In contrast to countries that take pride in using increasing amounts of steel scrap to produce ferrous metal and thus reduce carbon dioxide (CO2) emissions, India only uses about 30 MT of scrap per year.
    • India is still in its early stages, with low recycling awareness. Unfortunately, only 30 per cent of India’s recyclable scrap is recycled.

    What is Reverse Charging of GST?

    • Reverse charging of Goods and Services Tax (GST) is a mechanism in which the liability to pay the tax is shifted from the supplier to the recipient of goods or services.
    • Under normal circumstances, it is the supplier who is liable to pay GST to the government.
    • However, in cases of reverse charging, the recipient of the goods or services becomes liable to pay the tax instead of the supplier.
    • Reverse charging is usually implemented in situations where the supplier is not registered under GST or has failed to deposit the GST dues with the government.
    • Reverse charging is a way for the government to ensure that the GST liability is fulfilled even if the supplier does not fulfill its obligations.

    Some examples of goods and services on which reverse charging is already applied are:

    1. Services provided by a goods transport agency
    2. Services provided by an advocate to a business entity
    3. Supply of manpower for any purpose
    4. Renting of a motor vehicle provided by any individual or HUF to a business entity
    5. Supply of specified goods like gold, silver, or precious stones by an unregistered supplier to a registered person.

    Why scrap industry?

    • The scrap industry in India is a largely unorganized sector, and many small players operate without proper registration or compliance.
    • This has led to tax evasion and revenue losses for the government.
    • Reverse charging on the scrap industry is aimed at plugging this gap and ensuring that the GST liability is fulfilled even if the supplier (in this case, the scrap dealer) is not registered or fails to deposit the GST dues with the government.

    Consequences of the move

    • Compliance Costs: The implementation of reverse charging on the scrap industry may increase compliance costs for stakeholders. Small players in the industry may find it challenging to comply with the new regulations, leading to increased compliance costs.
    • Administrative Burden: The scrap industry in India is largely an unorganized sector, and the application of reverse charging may impose an administrative burden on stakeholders. Many small players may not have the necessary infrastructure or resources to comply with the new regulations.
    • Cash flow impact: Reverse charging could impact the cash flow of small businesses, as they would have to pay GST upfront and then claim it back through input tax credit. This could lead to a shortage of working capital for small businesses.
    • Increased Paperwork: The application of reverse charging on the scrap industry may lead to an increase in paperwork and documentation for stakeholders. This could be challenging for small players who may not have the resources to handle the additional paperwork.
    • Implementation Challenges: The implementation of reverse charging on the scrap industry could be challenging, given that the sector is largely unorganized. It could be challenging to track unregistered players, and the government may face difficulties in enforcing the new regulations.

    Woes of Scrap Industry in India

    • Lack of infrastructure: The scrap industry in India is primarily an unorganized sector, with limited access to infrastructure such as proper storage facilities, transport, and handling equipment. This can limit the efficiency and productivity of the sector.
    • Low productivity: The scrap industry in India faces low productivity due to the use of outdated technology and inadequate skills among workers. This can limit the competitiveness of the industry and its ability to meet the demand for scrap.
    • Inadequate regulatory support: The scrap industry in India lacks adequate regulatory support, which can result in a lack of standardization and transparency in the sector. This can lead to issues such as underreporting of sales, tax evasion, and other malpractices.

    Stakeholder response

    • The scrap industry has expressed concerns over the potential increase in compliance costs and administrative burden that may arise from the implementation of reverse charging.
    • This might affect the recycle economy.

     

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  • Latest spike in Inflation and RBI’s efforts

    RBI

    Central Idea

    • India’s post-pandemic economic recovery has hit a roadblock with the resurgence of inflation, hindering progress despite three consecutive months of softening. Recent significant spike in inflation, leading the Reserve Bank of India to adopt an inflation-targeting stance by raising interest rates. However, the battle to curb inflation is still ongoing, and the latest data raises doubts about whether the RBI’s efforts are sufficient.

    RBI

    What is Inflation?

    • Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices.
    • Typically, prices rise over time, but prices can also fall (a situation called deflation).

    Consumer Price Index (CPI)

    • CPI is used to monitor changes in the cost of living over time.
    • When the CPI rises, the average Indian family has to spend more on goods and services to maintain the same standard of living.
    • The economic term used to define such a rising prices of goods and services is Inflation.

    RBI

    Inflation outlook

    • RBI’s Inflation target: The inflation targeting framework mandates the RBI to achieve a CPI consumer price index inflation target of 4 per cent.
    • Inflation during the pandemic was still within the target band: During the pandemic period of March 2020 to September 2021, CPI inflation averaged 5.9 per cent. This was higher than the point target of 4 per cent but still within the inflation targeting band of 2-6 per cent.
    • Inflation outlook has been worsening: In 2022, CPI inflation was above the upper threshold of the RBI’s targeting band for 10 consecutive months, which meant the target was not achieved for three quarters in a row.
    • Optimism that the Inflation began softening: By December 2022, CPI inflation was down to 5.7 per cent. This led many to believe that the inflation peak had passed, and that inflation was on its way to the official target.
    • This optimism was misplaced: Underlying inflationary pressures still persist. The softening of inflation in November and December 2022 was largely driven by a steep fall in vegetable prices. Excluding vegetables, CPI inflation was in fact more than 7 per cent.
    • The misplaced optimism has now become evident: The January 2023 CPI inflation came out to be 6.5 per cent, once again crossing the upper threshold of the RBI’s inflation targeting band.

    Back to basics: Core Inflation

    • The core inflation rate measures rising prices in everything except food and energy.
    • That’s because gas prices tend to escalate now and then. Higher gas costs increase the price of food and anything else that has large transportation costs.

    inflation

    What contributed to the latest spike in inflation?

    • Rise in food prices: With food accounting for 46 per cent of the overall CPI basket, a rise in food inflation from roughly 4 per cent in December 2022 to almost 6 per cent in January 2023 has played an important role in overall inflation going up.
    • Cereal inflation is soaring high: Within food, one component that has proved rather stubborn is cereal inflation. Between May and December 2022, year-on-year cereal inflation nearly doubled from 5 per cent to 14 per cent. In January 2023, this increased to 16 per cent. Within cereals, inflation in wheat has been steadily going up. Between May and December 2022, wheat inflation increased from 9 per cent to 22 per cent. It increased even further to 25 per cent in January 2023.
    • The steep rise in wheat prices reflects shortages: Data from the Food Corporation of India shows that stocks in government warehouses declined. The government has recently approved a release of three million tonnes in the open market. However, this is insufficient to restore market supplies.
    • Persistently high core inflation: Second, core (non-food, non-fuel) inflation in January came out to be 6.2 percent. This is consistent with the unyielding core inflation of 6 per cent for nearly three years now. A persistently high core inflation implies that price pressures have become entrenched in the system.
    • External factors also play a role: Inflation in developed countries continues to be high (6.4 per cent in the US; 8.5 per cent in the EU; 10.5 per cent in the UK). India is importing some of this elevated inflation through international trade in goods and services. Moreover, with China gradually opening up its economy after nearly three years of zero-Covid restrictions, commodity prices are likely to go up, which could exert renewed pressures on India’s inflation.

    What have the policymakers been doing to address the inflationary concerns?

    • The government has done its bit by announcing a conservative Union budget for 2023-24: It has accorded primacy to much needed fiscal consolidation, and has refrained from announcing populist measures that could have arguably fuelled demand, and hence inflation.
    • The RBI has been doing its job as well: It increased the policy repo rate from a pandemic low of 4 per cent to 6.5 per cent in a span of 10 months. Unlike last year, when despite rising inflation, the monetary policy statements did not contain any forward guidance, the RBI, in its February 2023 statement, emphasised the importance to remain alert on inflation, thereby hinting that the monetary tightening cycle is not over yet.

    Conclusion

    • Inflation has been a challenge for India’s economy post-pandemic, despite the RBI’s attempt to control it by raising interest rates. A credible glide path to bring inflation down is essential today.

    Mains question

    Q. Despite of RBI’s efforts there is significant spike in inflation In India. Discuss the factors that contributed to the latest spike in inflation in India and what are the policymakers doing to address inflationary concerns?

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  • Startup20 Engagement Group On India’s Proposal

    Engagement

    “A small group of determined and like-minded people can change the course of history.”-M.K. Gandhi

    Central Idea

    • By agreeing to India’s proposal to create the Startup20 Engagement Group, the only new group by which G20 has turned itself into an ambidextrous institution, one where both large corporations and startups have an equal voice in taking the economies forward. In the new architecture, while the existing B20 Engagement Group continues its focus on corporations, the Startup20 takes on the policy issues concerning the global startup ecosystem, with the necessary linkages between the two groups.

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    What is meant by ambidexterity?

    • Ambidexterity is the ability to use both hands with equal skill and ease.
    • In the context of organizations, it is the ability to simultaneously pursue both exploratory and exploitative strategies. This means being able to balance the need for innovation and new opportunities with the need for efficiency and optimization of current operations.
    • For example, Indian IT services companies like TCS and Infosys are investing in areas like artificial intelligence, blockchain, and the IoT, even as they continue to deliver traditional IT services to their clients.

    What is B20 Engagement Group?

    • Official G20 dialogue forum representing the global business community: The B20 (Business 20) Engagement Group is a forum for international business leaders from the G20 countries.
    • Established in 2010: It is among the most prominent Engagement Groups in G20, with companies and business organizations as participants.
    • A single voice for the entire G20 business community: The B20 leads the process of galvanizing global business leaders for their views on issues of global economic and trade governance and speaks in a single voice for the entire G20 business community.
    • Aim is to provide recommendations: The group’s aim is to provide recommendations to the G20 on issues such as economic growth, trade, investment, digitalization, sustainability, and job creation.
    • Platform for different stakeholders: The B20 is one of several engagement groups, which also include groups representing civil society, labor, think tanks, and youth, that provide a platform for different stakeholders to share their views and insights with the G20.
    • B20 Secretariat: Confederation of Indian Industry (CII) has been designated as the Business 20 (B20) Secretariat for the India’s G20 Presidency.

    What is Startup20?

    • Initiated under India’s G20 Presidency: The Startup20 Engagement Group has been initiated under India’s G20 Presidency in 2023.
    • Aims to support Startups: The group aims to create a global narrative for supporting startups and enabling synergies between startups, corporates, investors, innovation agencies and other key ecosystem stakeholders.
    • Three taskforces: The engagement group comprises of three taskforces, namely Foundation & Alliance, Finance, and Inclusion & Sustainability, where delegates will come together to discuss efficient policy frameworks to promote scaling up of startups in the G20 nations.

    How these taskforces will work?

    1. Foundation and Alliances Taskforce:
    • Promotes consensus-based ecosystem: The Foundation and Alliances Taskforce will work to harmonize the global Startup ecosystem through consensus-based definitions and promote a global community of knowledge sharing among the Startup ecosystems to explore opportunities.
    • Help to bridge the knowledge gaps: It will also bridge the knowledge gap between the Startup ecosystems of G20 member countries and emerging economies through partnerships to enable more industry players across G20 nations to work with Startups and concrete solutions.
    • To create supportive policies and point of contact: It will aim to create supportive policies for industry players and government organizations to work with Startups and provide points of contact for the participating G20 countries sustained collaboration.
    1. The Finance Taskforce:
    • To provide financing and investment platforms: The finance taskforce will aim to increase access to capital for Startups by providing financing and investment platforms specifically for early-stage Startups to broaden the array of financial instruments available to Startups.
    • Networking opportunities: It will also create pitching and networking opportunities for Startups with the global investor community.
    • Best practices for funding ecosystem: It will work to provide a framework built upon best practices for global investors to fund Startups across G20 member nations, helping build suggestive frameworks that could be implemented in emerging ecosystems for building investment capabilities.
    1. Taskforce for Inclusion and Sustainability
    • Women led startups and community inclusive: For Inclusion and Sustainability, the roadmap involves increasing support for women led Startups and organizations; promotion of Startups working on making communities more inclusive and to promote Startups working on SDGs in areas of global interest.
    • Encouraging investors to invest in startups built upon sustainable practices: This Task Force aims to enable more investors to invest responsibly in Startups built upon sustainable practices and to encourage mentorship support to the Startup ecosystems of the G20 member countries and emerging economies.

    Conclusion

    • Some of the most pressing challenges facing the world today require innovative solutions at scale. The need for solutions to global problems such as climate change, food security, and energy security is urgent. However, by leveraging global ambidexterity and taking advantage of the G20’s new architecture of B20 and Startup20, we can be optimistic about our ability to systematically solve these problems. With deliberate efforts and focused action, we can create a more sustainable and prosperous future for all.

    Mains question

    Q. What is Startup20 engagement group initiated under India’s G20 presidency? How this framework will work to boost startup ecosystem globally?

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  • Industry pushes separate Ministry for Microenterprises

    Central Idea: The Consortium of Indian Associations (CIA) has suggested the formation of an independent ministry for the self-employed and microenterprises to address specific issues concerning the sector.

    Why demand for new Ministry?

    • Micro entrepreneurs continue to be governed by complicated and outdated laws and dispensable compliance burdens.
    • Despite the government’s efforts, MSMEs in India face several challenges such as access to finance, lack of skilled labor, and inadequate infrastructure.
    • New ministry might help in providing different types of support and benefits from the government, such as access to credit, subsidies, and tax exemptions.

    What are Microenterprises?

    • Microenterprises are small businesses that typically have a small number of employees, limited assets, and low levels of annual turnover or revenue.
    • The term “microenterprise” is often used interchangeably with “microbusiness” or “micro firm.”
    • Microenterprises can be found in a wide range of sectors, including retail, manufacturing, and services.
    • Examples of microenterprises include small retail shops, food stalls, street vendors, small manufacturing units, and service providers such as plumbers, electricians, and small-scale service providers.

    Features of Microenterprises

    • In general, microenterprises are considered the smallest type of business.
    • They are typically characterized by their low capital investment and simple production processes.
    • These businesses are often started by entrepreneurs who are seeking self-employment and a means to earn a livelihood.

    Why are they important?

    • Employability: Microenterprises are an important part of many economies, especially in developing countries, where they can provide vital employment opportunities and contribute to economic growth.
    • Scale of business: Such enterprises have huge potential of business penetration at household and domestic level by providing a range of services.

    Microenterprises in India

    • According to the Ministry of Micro, Small and Medium Enterprises (MSMEs), there are approximately 6.3 crore (63 million) MSMEs in India, which employ around 11 crore (110 million) people.
    • In India, MSMEs are classified based on their investment in plant and machinery or equipment, as well as their annual turnover.
    • The classification of MSMEs is as follows:
    1. Micro Enterprises: Micro enterprises are the smallest type of enterprises and have a lower investment limit than the other two categories. For manufacturing enterprises, the investment limit is up to Rs. 1 crore in plant and machinery, while for service enterprises, the investment limit is up to Rs. 50 lakh. The turnover limit for both types of enterprises is up to Rs. 5 crore.
    2. Small Enterprises: Small enterprises are those that have an investment in plant and machinery or equipment between Rs. 1 crore to Rs. 10 crore. For service enterprises, the investment limit is between Rs. 50 lakh to Rs. 2 crore. The turnover limit for both types of enterprises is between Rs. 5 crore to Rs. 50 crore.
    3. Medium Enterprises: Medium enterprises have a higher investment limit than small enterprises. For manufacturing enterprises, the investment limit is between Rs. 10 crore to Rs. 50 crore, while for service enterprises, the investment limit is between Rs. 2 crore to Rs. 5 crore. The turnover limit for both types of enterprises is between Rs. 50 crore to Rs. 250 crore.

    Various initiatives

    The government of India has taken several initiatives to support the growth of MSMEs in the country, such as:

    • Udyam Portal: The government has introduced a new registration process called Udyam Registration to make it easier for MSMEs to register and avail of various government schemes and benefits.
    • Credit Guarantee Fund Scheme: The Credit Guarantee Fund Scheme provides collateral-free loans to MSMEs from banks and other financial institutions.
    • Cluster Development Programme: The government has launched the Cluster Development Programme to enhance the competitiveness of MSMEs by providing support for infrastructure, technology, and marketing.
    • National SC-ST Hub: The National SC-ST Hub aims to promote entrepreneurship among Scheduled Castes and Scheduled Tribes by providing support for capacity building, market linkages, and access to finance.
    • Technology Upgradation: The government provides financial support to MSMEs for technology upgradation through various schemes such as the Technology Upgradation Fund Scheme and the Credit Linked Capital Subsidy Scheme.

    Way forward

    If the govt. is to consider creating a separate ministry for microenterprises, there are several steps that could be taken to ensure its effectiveness:

    • Defining clear objectives: This should be based on a thorough understanding of the challenges faced by microenterprises and the opportunities available to them.
    • Coordination with other ministries: The new ministry should coordinate with other ministries to ensure that the policies and initiatives developed are aligned with the broader economic and social objectives of the government.
    • Developing policies and initiatives: The ministry should develop policies and initiatives that address the specific needs of microenterprises in India such as access to finance, technology, and markets.
    • Strengthening institutional capacity: The ministry should have a strong institutional capacity to implement policies and initiatives effectively. This could involve recruiting experts in the field of microenterprises and strengthening the capacity of existing institutions.
    • Creating awareness: The ministry should create awareness among microenterprises about the support and services available to them. This could involve organizing workshops and training programs, as well as leveraging digital platforms to disseminate information.

     

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  • Ring around a dwarf planet lies in Roche Limit: What it means, why it matters

    roche limit

    Central idea: A new study shows that a dwarf planet, named Quaoar, has a ring system that exists within its Roche limit.

    What is the news?

    • Astronomers have found a ring around a dwarf planet, located in the Kuiper Belt at the solar system’s edge, called Quaoar, according to a new study.
    • The ring, however, is positioned much further away from the planet than is usual and defies theoretical explanations.

    About Quaoar

    • With an estimated radius of 555 km, Quaoar is roughly half the size of Pluto and orbits beyond Neptune.
    • It also has a moon of its own, which is known as Weywot.
    • As the dwarf planet is too small and too distant to be observed directly, the researchers detected the ring with the help of a phenomenon called stellar occultation.

    How was the ring discovered?

    • A stellar occultation occurs when, as seen from Earth, a bright star passes behind a planet.
    • This allows astronomers or anybody on Earth to observe the sharp silhouette of the planet for a brief period of time.
    • The phenomenon, which rarely occurs, is used by researchers to analyze a planet’s atmosphere and determine if it has a ring around it — in 1977, scientists discovered the Uranian ring system with the help of stellar occultation.

    What is the Roche limit?

    • The most intriguing part of the findings is the distance between Quaoar and its ring.
    • Located 2,500 miles away from the dwarf planet, the ring is around 1,400 miles further away from the Roche limit, as per the calculations of the scientists.
    • It suggests that at such a distance, the particles of the ring should have come together to form a moon.
    • For a further understanding of the Roche limit, let’s look at the Earth and the moon. The Earth’s gravity pulls on the moon.
    • However, one side of the moon is closer to the planet and hence, the pull is stronger on the side facing the Earth.
    • The result is the so-called tidal force, which either stretches or compresses the moon from all sides.

    What is the reason behind Quaoar’s far-out ring?

    • As of now, nobody exactly knows how Quaoar’s ring has managed to remain stable at such a distance from the Roche limit.
    • The researchers said that there can be a variety of possible explanations but they aren’t sure about any one of them.
    • It might be possible that Quaoar’s moon, Weywot, or some other unseen moon contributes gravity that somehow holds the ring stable.
    • Another potential explanation can be that the particles of the ring are colliding with each other in such a way that they are avoiding to coalesce into a moon.

     

    Try this MCQ:

    Q.What is the Roche limit?

    A) The distance from a planet where its gravity is balanced by the gravitational force of another celestial body

    B) The minimum distance from a planet that a moon can orbit without being pulled apart by tidal forces

    C) The distance from the sun at which a planet can have a stable orbit

    D) The distance from the earth where meteoroids burn up upon entering the atmosphere

     

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  • Divyang friendly digital infrastructure in India

    digital

    Central Idea

    • The estimation in Census 2011, that 2.21% of India’s population is disabled is a gross underestimation. According to the World Health Organization, about 16% of the global population is disabled. While technology has enormous potential to level the playing field for the disabled, it can, at the same time, reinforce the barriers that the disabled otherwise face if it is not designed with their needs in mind.

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    Smartphone users with disabilities in India

    • It is difficult to determine the exact number of smartphone users with disabilities in India, as there is no specific data available on this.
    • However, according to the 2011 Census of India, there are approximately 2.68 crore (26.8 million) people with disabilities in the country.
    • India, it is reported, had 750 million Internet/smartphone users in 2020.
    • Applying the 16% figure here, this works out to be roughly 120 million (12 crore) Internet/smartphone users with disabilities.

    A Report on Accessibility of Apps

    • Evaluation of the most widely used apps: A report that evaluates the accessibility of 10 of the most widely used apps in India, across five sectors. The apps were Zomato, Swiggy, PayTM, PhonePe, Amazon, Flipkart, Uber, Ola, WhatsApp and Telegram.
    • Goal for launching this report is to start discussion on digital accessibility: 1. Objective assessment of the digital accessibility of the apps. 2. To work with these service providers and help them design practices and processes that will not only improve app accessibility but also educate their stakeholders about accessibility and people with disabilities.
    • Findings of the report: Based on the number of violations, categories developed on the level of accessibility of the apps as high, medium and low. Report found that four out of the 10 apps ranked low, while five were in the medium category.

    digital

    key efforts for Divyanga friendly digital infrastructure

    • Guidelines for Indian Government Websites: The Department of Administrative Reforms and Public Grievances (DARPG) has developed guidelines for making government websites accessible to people with disabilities. The guidelines cover various aspects of website design and development, such as colour contrast, keyboard accessibility, and assistive technology compatibility.
    • Accessible India Campaign/ Sugamya Bharat Abhiyan: The Campaign was launched by the government in 2015 to make public spaces, including government buildings, transportation, and information and communication technologies (ICT), more accessible to people with disabilities.
    • Bharat Interconnectivity Limited (BIL): BIL is a subsidiary of Bharat Sanchar Nigam Limited (BSNL) that provides accessible internet and telecom services to people with disabilities. It offers services such as audiobooks, sign language interpretation, and accessible websites and mobile applications.
    • National Institute of Speech and Hearing (NISH): NISH is an autonomous institute under the Department of Empowerment of Persons with Disabilities, Ministry of Social Justice and Empowerment. It provides training and research in the field of speech and hearing disabilities and also offers services like audiobooks and accessible software.
    • Making assistive technology more affordable and accessible: The government has also taken steps to make assistive technology more affordable and accessible to people with disabilities.
    • For example: The Department of Empowerment of Persons with Disabilities provides financial assistance to purchase assistive devices and the Assistive Technology Industry Association (ATIA) has been established to promote research and development of assistive technology.

    digital

    Measures to improve the accessibility of digital services

    • Promoting education and awareness: Steps must be taken to raise awareness about the needs and capabilities of people with disabilities. This could include providing training to developers and designers on how to create accessible digital products and services.
    • Enforcing web accessibility standards: The government should ensure that all websites and mobile applications comply with web accessibility standards such as the Web Content Accessibility Guidelines (WCAG). This will make it easier for people with disabilities to access digital services.
    • Encouraging inclusive design: Designing products and services that are accessible to all users, including those with disabilities, should be an essential part of the design process. Companies and developers should be encouraged to incorporate inclusive design principles into their products from the beginning.
    • Conducting regular accessibility audits: Regular accessibility audits should be conducted to ensure that digital products and services are accessible to people with disabilities. This can help identify barriers and areas of improvement.

    Conclusion

    • Core to the project of securing a more disabled friendly digital ecosystem must be the conviction that, everything digital must be accessible to everyone. This starts with incorporating the principles of accessibility and inclusive design into every digital offering, right from inception. India needs to be truly accessible for all people with disabilities. Organisations, companies, civil society, the government and the courts must make this happen.

    Mains question

    Q. Discuss the efforts of the Indian government towards creating a Divyanga-friendly digital infrastructure and suggest measures to improve the accessibility of digital services.

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  • Income Tax Dept. surveys BBC over Transfer Pricing allegations

    tax

    Central idea: The Income Tax Department has conducted surveys at the premises of the British Broadcasting Corporation (BBC) in Delhi and Mumbai. The BBC has been deliberately violative of transfer pricing rules.

    Transfer Pricing: A Tax Evasion Technique

    • Transfer pricing refers to the practice of determining the price at which goods, services or intangible property are sold between related entities within an enterprise across international borders.
    • It is a practice of multinational companies transferring profits to low-tax jurisdictions to reduce their tax liabilities.

    How does Transfer Pricing work?

    • The I-T Department gives the following example: “Suppose a company A purchases goods for 100 rupees and sells it to its associated company B in another country for 200 rupees, who in turn sells in theopen market for 400 rupees.
    • Had A sold it (the good) direct, it would have made a profit of 300 rupees.
    • But by routing it through B, it (A) restricted it (profit) to 100 rupees, permitting B to appropriate the balance.
    • The transaction between A and B is arranged and not governed by market forces.
    • The profit of 200 rupees is, thereby, shifted to the country of B. The goods is transferred on a price (transfer price) which is arbitrary or dictated (200 hundred rupees), but not on the market price (400 rupees).

     

    What is a ‘Survey’ under the I-T Act?

    • Section 133A of the Income Tax Act, 1961 empowers the Income Tax Department to conduct surveys to collect hidden information.
    • I-T authority can enter any place of business or profession within their jurisdiction, verify books of account, and impound documents if needed.

    What is an I-T search?

    • Section 132 of the Income Tax Act, which I-T Department to conduct searches when it has reasons to believe that someone is in possession of undisclosed income or property.

    Differences between a survey and a search

    • A survey is a less serious proceeding than a search and can only be conducted during working hours on business days within the limits of the area assigned to the officer.
    • In contrast, a search can happen on any day after sunrise, and the entire premises can be inspected to unravel undisclosed assets, with the help of police.
    • While the scope of a survey is limited to the inspection of books and verification of cash and inventory, in a search, the entire premises can be inspected to unravel undisclosed assets, with the help of police.

    Powers of the I-T authority during a search

    • The provisions for impounding or seizing the goods were introduced only by the Finance Act, 2002.
    • The Act says that during a search, an authorized officer can:
    1. Enter and search any building or place where he has reason to suspect that such books of account, other documents, money, bullion, jewellery, or other valuable article or thing are kept;
    2. Break/open the lock of any door, box, locker, safe, almirah, or other receptacles for exercising the powers conferred by clause (i) where the keys thereof are not available;
    3. Seize any such books of account, other documents, money, bullion, jewellery, or other valuable article or thing found as a result of such search;
    4. Place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom;
    5. Make a note or an inventory of any such money, bullion, jewellery, or other valuable article or thing.

    What are Transfer pricing rules?

    • By setting transfer pricing rules, countries can ensure that companies pay taxes on profits generated within their jurisdiction.
    • Transfer pricing rules are used to determine the “arm’s length price” at which transactions between related entities should take place.
    • The arm’s length price is the price that would have been charged between unrelated entities in similar circumstances.
    • The rules aim to ensure that related entities do not shift profits to low-tax jurisdictions, and that the tax authorities of different countries get their fair share of taxes.

    What is the role of tax authorities in curbing transfer pricing?

    • Audit: The tax authorities can carry out transfer pricing audits to determine whether the prices used in transactions between related entities are in accordance with the arm’s length principle.
    • Compliance of Arm’s length principle: If the tax authorities find that the prices are not in accordance with the arm’s length principle, they can make adjustments to the prices and levy taxes accordingly.

    What is the “Arm’s Length Arrangement” that the BBC has allegedly violated?

    • Section 92F(ii) of the Income Tax Act, 1961 defines arm’s length price as “a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions”.
    • Section 92C(1) says arm’s length shall be determined by the “most appropriate” among the following methods:
    • comparable uncontrolled price method;
    • resale price method;
    • cost plus method;
    • profit split method;
    • transactional net margin method;
    • such other method as may be prescribed by the I-T Board.

    What lies ahead for BBC?

    • BBC will have to comply with transfer pricing rules in each country in which they operate.
    • Failure to comply with transfer pricing rules can lead to tax liabilities and penalties.
    • Compliance with transfer pricing rules can be complex and require the assistance of tax experts.

    Try this MCQ:

    Q. Which government agency regulates transfer pricing rules in India?

    A) Reserve Bank of India

    B) Securities and Exchange Board of India

    C) Income Tax Department

    D) Ministry of Corporate Affairs

     

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  • Big Lithium find: Risks and Rewards

    lithium

    Central idea: The discovery of 5.9 million tonnes of lithium in Jammu & Kashmir is a major boost for India’s electrification plans but mining is a high-risk, high-reward game in the ecologically sensitive Himalayas.

    India’s lithium treasure

    • Huge deposits: Authorities have found 5.9 million tonnes of lithium reserves in Reasi district of Jammu & Kashmir.
    • One of the largest mines: This may be the seventh largest deposit of the rare element, accounting for roughly 5.7% of all the reserves in the world.
    • High grade quality: They are also said to be of a higher grade—550 parts per million (ppm) against the average 220 ppm—making it highly lucrative, given how lithium prices have soared in the last few years.

    Game-changing prospects for India

    • White gold: Due to its ability to pack energy, it has utility across a range of sectors and has gained the moniker ‘white gold’.
    • Soaring prices: According to the International Energy Agency, lithium prices went up more than seven-fold between the start of 2021 and May 2022.
    • Battery economy: It is now primarily used to build the batteries that power modern appliances.
    • EV push: They also power electric vehicles, a segment that will corner most of the global lithium production in future.
    • Import cut: Currently, India does not have its own lithium resources and like crude oil, it is dependent on imports. In fiscal 2022, India imported lithium and lithium ion worth almost ₹14,000 crore.

    Will batteries be made of lithium from India now?

    • There is still some way to go before miners can extract lithium for industrial use.
    • The discovery is ‘inferred’ or preliminary, the lowest of the three levels of estimations of a mineral deposit and the second of the four stages of exploration, as per the UN Framework Classification of mineral resources.
    • There is much analysis to be done before its true value is confirmed.

    Pitfalls of lithium mining

    • Pollution in the valley: Open-pit-mining, refining, and waste disposal from these processes substantially degrades the environment, including depletes and contaminates waterways and groundwater, diminishes biodiversity, and releases considerable air pollution.
    • Water intensity: Extracting lithium from its ore is highly water-intensive, taking about 2.2 million litres of water for one tonne of lithium.
    • Seismicity threats: The Himalayas are a highly fragile and eco-sensitive region and as the recent Joshimath subsidence shows, it is vulnerable to long-term adverse consequences of unplanned development works.
    • Displacement issues: Mining in the region could displace local communities and have significant social impacts. The region is home to a number of indigenous communities who could be negatively impacted by mining in the region.
    • Undue activism over Kashmir: Mining in the region can attract opposition from environmentalists and so-called separatists disguised as national leaders.

    Geostrategic considerations

    • Sensitive location: The new lithium discovery in J&K has significant geostrategic implications due to the geopolitical sensitivity of its location.
    • Neighborhood hostility: The Union territory of J&K has a history of cross-border tensions, domestic insurgency, and terrorism.
    • Resentment of local population: Lack of meaningful engagement with the local populace in the Li extraction project could introduce new frontiers of socio-environmental conflict.

    China factor

    • China currently dominates the global lithium-ion battery manufacturing industry.
    • Dependence on China for Li and other crucial metals and their derivatives is a source of energy security risks.
    • Major economies such as the E.U., the U.S., Canada, and India are seeking alternative supplies to challenge China’s geopolitical dominance.

    Indian initiatives in this regard

    • Undeterred trade with China: India’s security considerations are more immediate due to the growing geopolitical rivalry with China and longstanding territorial disputes.
    • Rare Earths Mission: The Indian government and industry are pushing for a ‘Rare Earths Mission’ to reduce dependence on China and exploit the country’s critical mineral reserves.

    Conclusion

    • In effect, the proliferation of EVs could mean India becoming dependent on China, just like it is reliant on the Middle East for crude oil today.
    • J&K’s reserves, however, provide a major opening for India to be self-reliant.

     

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