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GS Paper: GS3

  • Making sense of Assam floods

    Context

    This year’s floods in Assam have been merciless. In many parts of the state, both rural and urban, shoals of water drove people from their homes and forced many of them to seek shelter for their livestock.

    Understanding the reasons for massive flood in Assam this year

    • The Bay has a major influence on the monsoon in Northeast India.
    • Two coupled ocean-atmosphere phenomena, one from the distant Pacific, La Niña and another in the tropical Indian Ocean, a negative dipole condition, combined to create high rainfall in the Bay of Bengal.
    • To add to that, a warmer atmosphere because of climate change can hold more moisture leading to intense bouts of rain.
    • Apart from embankment failures, a number of unofficial and media reports suggest that the devastation in the floodplains is also a consequence of the way the dams and reservoirs are operated.
    • This indicates that environmental factors unique to each locality are responsible for the floods.
    • The flooding pattern is usually repeated year-to-year. However, at times, this pattern is disturbed — this year for example.
    • The incidence of such megafloods depends on several variables like unusually high rainfall and the failure of critical embankments.

    Role of floods in the making of the floodplain environment and ecology

    • Rejuvenation of ecosystem: Floods cause disruption and damage but they also generate a bounty of fish and rejuvenate flood-plain ecosystems all along the Brahmaputra, including in the Kaziranga.
    • Landscape: This landscape has been shaped over millions of years with the help of an active monsoonal environment and mighty rivers that carry sediments weathered from the still-rising Himalaya.
    • Every year, the Brahmaputra and its tributaries — which are at the centre of Assam’s environment — transport billions of tonnes of sediment, mainly from the Eastern Himalaya, making the landscape volatile.
    • Flooding helps release waters to surrounding land and distribute sediments and nutrients across the floodplains and wetlands.

    How human presence has influenced floodplains

    • As the human footprint intensified on the floodplains, the landscape was increasingly “developed and engineered”.
    • The engineered and planned landscape has affected the floodplains in two ways: It has undermined their ability to store and absorb water and reduced their capacity to transport sediment.
    • Urban floods: This year’s floods took an especially worrying proportion in several urban areas.
    • Guwahati has historically been a lowland and the city has been uniquely shaped by three hills that accumulate water during the monsoon.
    • Its northern side faces one of the most turbulent rivers in the world.
    • However, extensive swamps, channels and their tributaries worked in tandem to make the place habitable.
    • A transformation, however, took place in the 20th century, especially in the later decades, when these natural features were forced to disappear.
    • From an estimated 11,000 people in 1901, the city now is home to close to 1.1 million people.
    • Such a population increase is bound to have several footfalls and not all of them could have been prevented.
    • What has hit the city hardest is the disappearance of some of its critical environmental features.

    Way forward

    • Human interventions such as dams to “tame” rivers and “stabilise” hydrologically dynamic landscapes and riverscapes should be based on guidelines that account for the environmental conditions in Northeast India, especially the fragile geology, changing rainfall patterns, high seismicity and the risk of landslides.
    • Resilience of people: The rapid transformation in rainfall characteristics and flooding patterns demand building people’s resilience.
    • Reconsider projects: Construction projects that impede the movement of water and sediment across the floodplain must be reconsidered.
    • Use of technology: At the same time, climate-imposed exigencies demand new paradigms of early-warning and response systems and securing livelihoods and economies.

    Conclusion

    Floods have played a key role in Assam’s ecology. But increasing human footprint has affected the ability of flood plains to absorb water and transport sediment.

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  • Aviation sector in India: Issue and Challenges

    What is the issue?

    Policymakers ought to recognise the country’s untapped potential and work towards dismantling the many hurdles.

    What is the significance of aviation sector?

    India is the world’s third-largest market in aviation sector.

    • Aviation is integral to equitable economic growth, for a country to be globally competitive and to change the situation of poverty and unemployment.
    • Passenger airlines and air cargo overcome geography and connect remote areas that are alienated from the mainstream.
    • They can drive investment deep into the country, giving people access to markets.
    • They also boost tourism, which is the largest employment generator in the unorganised sector.

    What is the status of aviation sector in India?

    • Pre-economic reform period– India had only two airlines – Air India and Indian Airlines.
    • Post 1991 reforms– The reforms that opened up the aviation sector in 1991 and ended the licence raj and the monopoly of Indian Airlines and Air India changed the sector.
    • Numerous private sector airlines were given the licence to fly, but Jet Airways and Sahara, survived, resulting in cartelisation.
    • The concept of low cost airlines in India took shape in 2003 which overcame the cost barrier.
    • Sadly, Indian aviation has become ‘the sick man of India’.

    What are the barriers in Indian aviation sector?

    • Per capita consumption of air tickets – The number of Indians who buy air tickets in 2019 is 140 million of which 35 million to 40 million frequent flyers form the bulk of ticket buyers.
    • It translates to less than 4% of the population who can afford air travel, placing India just alongside some poorer African countries, in terms of the per capita consumption of air tickets.
    • Factors affecting the growth of aviation sector– The growth of aviation has been affected by
      • Choking regulations
      • Tough entry barriers for new entrants
      • High fuel prices on account of sky high taxes
      • Inefficient public sector airports that pave the way for monopoly airports
    • Frequent and knee-jerk changes point to the absence of a long-term visionary strategic policy for the entire gamut of sectors in aviation.

    How efficient are government schemes in the development of the airline sector?

    • Boosting entrepreneurship- Start-up India initiative was started with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators.
    • Regional connectivity– Ude Desh Ka Aam Naagrik (UDAN) scheme aims to connect small and medium cities with big cities through air service.
    • Low cost airlines– UDAN plans to connect the underserved airports to key airports through flights that will cost Rs 2,500 for per hour flight.
    • Comprehensive development– The National Civil Aviation Policy 2016 aims to take flying to the masses and covers 22 areas of the Civil Aviation sector.

    What reforms are needed?

    • Reforms in all sectors– It is critical to understand that for passenger airlines to grow, there have to be reforms in all areas of aviation – air cargo, airports, aviation fuel taxes and Maintenance, Repair and Overhaul (MRO).
    • Updated laws– India’s Aircraft Act, 1934 and Aircraft Rules, 1937 need to be updated to keep pace with modern technology in aerospace, increasing costs to the industry and ultimately affecting passenger growth.
    • Overhaul DGCA – India’s statutory regulatory authority, the Directorate General of Civil Aviation (DGCA), needs to be modernised, well-staffed, motivated and incentivized.
    • Need for aviation professionals– There need to be aviation professionals in charge rather than the ubiquitous bureaucrat from the Indian Administrative Service.

  • What are Critical Minerals?

    India and Australia have decided to strengthen their partnership in the field of projects and supply chains for critical minerals.

    What is the news?

    • Australia has confirmed that it would commit A$5.8 million to the three-year India-Australia Critical Minerals Investment Partnership”.

    What are Critical Minerals?

    • Critical minerals are elements that are the building blocks of essential modern-day technologies, and are at risk of supply chain disruptions.
    • These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines.
    • Based on their individual needs and strategic considerations, different countries create their own lists.
    • However, such lists mostly include graphite, lithium, cobalt, rare earths and silicon which is a key mineral for making computer chips, solar panels and batteries.
    • Aerospace, communications and defence industries also rely on several such minerals as they are used in manufacturing fighter jets, drones, radio sets and other critical equipment.

    Why is this resource critical?

    • As countries around the world scale up their transition towards clean energy and digital economy, these critical resources are key to the ecosystem that fuels this change.
    • Any supply shock can severely imperil the economy and strategic autonomy of a country over-dependent on others to procure critical minerals.
    • But these supply risks exist due to rare availability, growing demand and complex processing value chain.
    • Many times the complex supply chain can be disrupted by hostile regimes, or due to politically unstable regions.
    • They are critical as the world is fast shifting from a fossil fuel-intensive to a mineral-intensive energy system.

    What is China ‘threat’?

    • China is the world’s largest producer of 16 critical minerals.
    • China alone is responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.
    • The level of concentration is even higher for processing operations, where China has a strong presence across the board.
    • China’s share of refining is around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.
    • It also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.
    • In 2010, China suspended rare earth exports to Japan for two months over a territorial dispute.

    What are countries around the world doing about it?

    • US has shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.
    • India has set up KABIL or the Khanij Bidesh India Limited to ensure mineral security of the nation.
    • Australia’s Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.
    • The UK has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals.

     

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  • Environment Protection Act (EPA), 1986

    The Union Environment Ministry proposes to soften the provisions of the EP Act (EPA) by replacing a clause that provides for imprisoning violators with one that only requires them to pay a fine.

    Environment Protection Act (EPA), 1986

    • EP Act was passed under Article 253 of the Constitution, which empowers the Centre to enact laws to give effect to international agreements signed by the country.
    • The purpose of the Act is to implement the decisions of the UN Conference on the Human Environment.
    • They relate to the protection and improvement of the human environment and the prevention of hazards to human beings, other living creatures, plants and property.
    • It was enacted in 1986 on the backdrop of Bhopal Gas Tragedy.
    • The Act was last amended in 1991.

    Why this Act?

    • The Act is an “umbrella” legislation that has provided a framework for the environmental regulation regime in India.
    • It covers all major industrial and infrastructure activities and prohibits and regulates specific activities in coastal areas and eco-sensitive areas.
    • The Act also provides for coordination of the activities of various central and state authorities established under other environment-related laws, such as the Water Act and the Air Act.

    Key provisions

    • The Environment (Protection) Rules lay down procedures for setting standards of emission or discharge of environmental pollutants.
    • The objective of Hazardous Waste (Management and Handling) Rules, 1989 is to control the generation, collection, treatment, import, storage, and handling of hazardous waste.
    • The Manufacture, Storage, and Import of Hazardous Rules define the terms used in this context, and sets up an authority to inspect, once a year.
    • The Cells Rules,1989 were introduced with a view to protect the environment, nature, and health in connection with the application of gene technology and micro-organisms.

     

    Try this PYQ:

    Q. Consider the following statements:

    The Environment Protection Act, 1986 empowers the Government of India to

    1. State the requirement of public participation in the process of environmental protection, and the Procedure and manner in which it sought.
    2. Lay down the standards for emission or discharge of environmental pollutants from various sources.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

    [wpdiscuz-feedback id=”at8cv2iqvf” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • What is Purchasing Managers Index (PMI)?

    India’s services firms saw growth in new business and output accelerate to a 11-year high in June, as per the survey-based S&P Global India Services Purchasing Managers Index (PMI).

    What is the news?

    • The index rose to 59.2 last month, from 58.9 in May, signalling a strengthening in demand across the services sector, which had borne the brunt of the COVID-19 pandemic.

    Purchasing Managers’ Index (PMI)

    • PMI is an indicator of business activity — both in the manufacturing and services sectors.
    • It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
    • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
    • The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

    How is the PMI derived?

    • The PMI is derived from a series of qualitative questions.
    • Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

    How does one read the PMI?

    • A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
    • Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
    • If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
    • If it is lower than the previous month then it is growing at a lower rate.

    What are its implications for the economy?

    • The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
    • It is, therefore, considered a good leading indicator of economic activity.
    • Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
    • Central banks of many countries also use the index to help make decisions on interest rates.

     

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  • Three new ‘exotic’ sub-atomic particles discovered  

    The Large Hadron Collider beauty (LHCb) experiment has observed three never-before-seen particles.

    What is the discovery?

    • CERN was investigating the slight differences between matter and antimatter by studying a type of particle called the “beauty quark”, or “b quark”.
    • The three “exotic” additions — a new kind of “pentaquark” and the first-ever pair of “tetraquarks” — to the growing list of new hadrons were found.
    • This discovery will help physicists better understand how quarks bind together into these composite particles.

    What are Quarks?

    • Quarks are elementary particles that come in six “flavours”: up, down, charm, strange, top, and bottom.
    • They usually combine together in groups of twos and threes to form hadrons such as the protons and neutrons that make up atomic nuclei.
    • But they can also combine into four-quark and five-quark particles, called tetraquarks and pentaquarks.
    • These exotic hadrons were predicted by theorists about six decades ago — around the same time as conventional hadrons — but they have been observed by LHCb and other experiments only in the past 20 years.

    What about tetraquarks and pentaquarks?

    • Most exotic hadrons discovered in the past two decades are tetraquarks or pentaquarks.
    • They contain a charm quark and a charm antiquark — with the remaining two or three quarks being an up, down or strange quark or their antiquarks.

     

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  • What is Fields Medal, the ‘Mathematics Nobel’?

    Ukrainian mathematician Maryna Viazovska was named as one of four recipients of the prestigious Fields Medal, which is often described as the Nobel Prize in mathematics.

    What is Fields Medal?

    • The Fields Medal is awarded by the International Mathematical Union (IMU), an international non-governmental and non-profit scientific organisation.
    • It is awarded every four years to one or more mathematicians under the age of 40 in recognition of “outstanding mathematical achievement for existing work and for the promise of future achievement”.
    • The winners are announced at the International Congress of Mathematicians (ICM), which was supposed to be held in Russia this year, but was moved to Helsinki.

    Belongings of the award

    • The honour carries a physical medal of 14K gold, 63.5 mm in diameter and weighing 169 g, and with a unit price of approximately 5,500 Canadian dollars.
    • There is also a cash award of CAD 15,000.
    • The obverse of the medal is embossed with the head of Archimedes facing right, and some Latin quotes.

    History of the Medal

    • According to the IMU website, the 1924 ICM in Toronto adopted a resolution that at each conference, two gold medals would be awarded to recognise outstanding mathematical achievement.
    • The Canadian mathematician Prof J C Fields, who was secretary of the 1924 Congress, later donated funds to establish the medals, which were named in his honour.
    • In 1966, it was agreed that, in light of the great expansion of mathematical research, up to four medals could be awarded at each Congress.

    Indian-origin winners

    • Among the more than 60 mathematicians who have been awarded the Fields Medal since 1936, there are two of Indian origin.
    • Akshay Venkatesh of the Institute for Advanced Study at Princeton, won in 2018, the last time the honour was announced.
    • Manjul Bhargava of the Department of Mathematics at Princeton University was awarded in 2014.

     

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  • The extent of poverty

    Context

    There has been an uproar about the working papers of the IMF and World Bank, reporting no or low poverty for India in the pandemic year or just before that.

    About the IMF paper

    • The paper by Roy and Weide (2022) for the World Bank explores the possibility of using CMIE (unemployment data) in poverty calculations after correcting for the unrepresentative character of its panel data by modifying the weightages of households for aggregation.
    • These adjustments carried out to remove the non-convergence of the CMIE data with other macro statistics have resulted in a poverty figure of 12 per cent.

    What does the poverty index measure or attempt to capture?

    • Its construction involves complex calculations — to identify a poverty basket of consumption, working out price indices for updation of the poverty line and then applying it to the income or consumption of households for determining their poverty status.
    • Absence of consumption expenditure: The computation becomes far more challenging in the absence of data on consumption expenditure as is the case in India and several developing countries.
    • Intending to provide inputs for policy making, researchers have evolved ingenious methods of estimating the data, using past datasets and those that have not been designed to get robust expenditure estimates.

    Background of poverty line in India

    • A nine-member working group set up by the Planning Commission proposed the poverty line at Rs 20 per capita per month in the early Sixties, loosely ensuring the adequacy of minimum requirements.
    • Poverty line based on calorie needs: Dandekar and Rath (1970) went into detail about minimum calorie needs, based on the average consumption pattern.
    • Issues with calorie based poverty line: During the Eighties and Nineties, it was realised that this linkage is getting blurred due to changes in the consumption pattern, microenvironment for living, etc.
    • Sukhatme argued that the emphasis on calories and nutrition is misplaced as the absorption of nutrients depends on physical health, particularly the presence or absence of gastrointestinal diseases.
    • Water and sanitation facilities were noted as important in determining the poverty line.
    •  It was accepted that the state, through poverty interventions, cannot and should not try to guarantee adequate nutrition to people.
    • Delinking the nutritional norms: The Tendulkar Committee formally announced delinking of nutritional norms from poverty in 2010.

    Extrapolating the consumption expenditure on NSS 2011-12

    • Bhalla, Virmani and Bhasin (2022) in their IMF Working Paper have developed a method of interpolation and extrapolation of the consumption expenditure of the NSS 2011-12 and building a series up to 2019-20.
    • They use the growth rate of private final consumption expenditure (PFCE) but bring in the distributional changes by allowing household consumption to grow as per the nominal per capita income in each state.
    • Takes into account rural-urban price difference: Rural-urban price differences are also introduced through separate poverty lines.
    • The method is reasonable except that it assumes the distributions to remain unchanged both within the rural and urban segments in each state over 2014-20.
    • Also, the growth rates of different commodities in the PFCE are significantly different and hence commodity-wise adjustments can be done to give higher weights to the items of consumption by the poor.
    • Taking into account the role of state: The most significant contribution of the study is its bringing in the differential engagement of the state in the provisioning of the essentials to the poor into poverty calculations.
    • This opens up the possibility of changes in the level of state engagement in poverty estimation, including free gas cylinders, etc.

    Conclusion

    People find the World Bank paper figures pegged at 12% more acceptable not because of the methodology but the magnitude. One does not know whether the poverty estimate would be a bit higher had the adjustments been carried out for a few other parameters and also at the state level.

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  • Outer Space

    Recently, the UK hosted the fourth summit for Space Sustainability in London in collaboration with the Secure World Foundation.

    What does Sustainability in Outer Space mean?

    • One of the hot issues when it comes to space sustainability is orbital crowding.
    • With the emergence of large constellations and complex satellites, there is a risk of collisions and interference with radio frequencies.
    • It poses a direct threat to the operations and safety of a mission and is likely to cause legal and insurance-related conflicts.
    • Space debris is another prominent issue.
    • After the completion of a mission, an ‘end-of-life protocol’ requires space objects to be moved to the graveyard orbit or to a low altitude.
    • Other causes of concern are solar and magnetic storms which potentially damage communication systems.
    • Such space weather threats need to be addressed along with the efforts to identify the terrestrial carbon footprint of outer space missions.

    Why was a conference held in the UK?

    • Long-term sustainability looks toward space research and development of technology to ensure the reuse and recycling of satellites at every stage.
    • The UK plan proposes active debris removal and in-orbit servicing.

    Policy measures so far

    • As the outer space is considered a shared natural resource, the United Nations Committee on the Peaceful Uses of Outer Space (COPUOS) in 2019 adopted a set of 21 voluntary, non-binding guidelines.
    • They aim to ensure the long-term sustainability of outer space activities.

    What does the UK plan for space sustainability entail?

    • The UK calls for an “Astro Carta” for space sustainability, based on the Artemis Accords model for sustainable space exploration.
    • The UK Space Sustainability plan mentions four primary elements:
    1. To review the regulatory framework of the UK’s orbital activity
    2. To work with organisations such as the G-7 and the UN to emphasise international engagement on space sustainability
    3. To try and develop safety and quality-related metrics that quantify the sustainability of activities; and
    4. To induce additional funding of $6.1 million on active debris removal
    • The UK also confirmed investments in its National Space Surveillance and Tracking Programme, which works on collision assessment services for UK-licenced satellite operators.

    Where does India stand on space sustainability?

    • India is well on its way to create a subsystem that addresses global sustainability questions.
    • The headquarters of the Indian National Space Promotion and Authorisation Centre (In-SPACe) was formally inaugurated last month.
    • One can expect an increased role of the private sector in India’s space activities.
    • The ISRO has initiated ‘Project NETRA’ to monitor space debris.
    • To provide in-orbit servicing, ISRO is developing a docking experiment called ‘SPADEX’.
    • It looks at docking a satellite on an existing satellite, offering support in re-fuelling and other in-orbit services while enhancing the capability of a satellite.

    Way forward

    • Outer space in the 2020s can no longer be considered a ‘space race’ because of the cost, when compared to the beginning of this century.
    • Today, any entity (government or private) with the necessary access to resources and technology can invest in outer space.
    • Sustainable practices in outer space would directly help reduce orbital crowding and collision risk while nurturing future technologies.
    • As the natural course of evolution, the Plan for Space Sustainability, which includes private industries, is a timely move.
    • This would serve as a model for other space programmes.

     

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  • Hotels cannot force customers to pay Service Charge: Centre

    The Central Consumer Protection Authority (CCPA) issued guidelines asking hotels and restaurants not to collect service charge from customers.

    We often get to hear in news. Once a person had used a loo at a hotel in our national capital. She was charged ₹499 as a service charge in return of purchasing a water bottle!

    What is the news?

    • Under the guidelines, consumers can lodge complaints against hotels and restaurants by calling the number 1915.
    • The CCPA has issued guidelines under Section 18 (2) (I) of The Consumer Protection Act, 2019.
    • The CCPA was established in July 2020 to promote, protect, and enforce the rights of consumers as a class, and to investigate, prosecute, and punish violators.

    What are the guidelines?

    • The CCPA has issued five major guidelines regarding the levy of service charge by restaurants and hotels, which has for long been a contentious issue and has periodically triggered complaints from consumers.
    • The guidelines say:
    1. No hotel or restaurant shall add service charge automatically or by default in the bill;
    2. Service charge shall not be collected from consumers by any other name;
    3. No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional, and at the consumer’s discretion;
    4. No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers; and
    5. Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.

    What can a consumer do in case of a violation of these guidelines?

    • The consumer has four options at different levels of escalation in case she spots the levy of service charge in her bill.
    • First, she can make a request to the hotel or restaurant to remove the service charge from her bill.
    • Second, she can lodge a complaint on the National Consumer Helpline (NCH), which works as an alternative dispute redressal mechanism at the pre-litigation level.
    • The complaint can be lodged by making a call on the number 1915, or on the NCH mobile app.
    • Third, the consumer can complain to the Consumer Commission, or through the edaakhil portal, http://www.edaakhil.nic.in.
    • Fourth, she can submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA.
    • A consumer can complain directly to the CCPA by sending an e-mail.

    What are the components of a food bill?

    • A restaurant bill in India comprises food charge (from the menu), with an addition of service charge (anywhere between 5 to 15 per cent) and a 5 per cent GST on this amount (IGST+SGST).
    • This is for all kinds of standalone restaurants.
    • In case a restaurant is located inside a hotel wherein room rate is upwards of Rs 7,500 (mostly in case of five-stars), the GST would be 18 per cent.

    Nature of Service charge

    • While the GST is a mandatory component as per law, the service charge is supposed to be optional.
    • It is the equivalent of what is known as gratuity around the world, or tip, in casual parlance.
    • Most restaurants decide the service charge on their own, and print it at the bottom of the menu with an asterisk.

    What do the restaurants say?

    • The levy of service charge by a restaurant is a matter of individual policy to decide if it is to be charged or not.
    • There is no illegality in levying such a charge.
    • Once the customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice.
    • GST is also paid on the said charge to the Government.

    Where does the fund go?

    • Restaurants claim that a major chunk of the service charge thus collected goes to the staff, while the rest goes towards a welfare fund to help them out during good and bad times.
    • It’s a default billing option, even as customers can choose not to pay it if they don’t want to.
    • Of course, they are paid the salaries but the service charge works as an incentive for them.
    • Restaurateurs also say that patrons can decide not to pay the charge and tip the server directly, but in this case, the backroom staff doesn’t get anything.
    • A service charge ensures all staff members are rewarded evenly.

    What is the issue then?

    • The issue is that almost all restaurants have put service charge (fixed at their own accord) as a default billing option.
    • And if a consumer is aware that it is not compulsory and wants it removed or wants to tip the server directly, the onus is on them to convince the management why they don’t want to pay it.
    • The department says they received several complaints saying it leads to public embarrassment and spoils the dining experience since at the end of it, they either pay the charge quietly and exit the place feeling cheated, or have to try hard to get it removed.
    • Also, there is no transparency as to where this charge goes.
    • The officials also say that collecting service charge on their own and paying GST on it to the government doesn’t make it authorised.

    Problems faced by customers

    • It is this component which has come under dispute from time to time, with consumers arguing they are not bound to pay it.
    • It also said that hotels and restaurants charging tips from customers without their express consent in the name of service charges amounts to unfair trade practice.

     

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