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GS Paper: GS3

  • Highlights of State of the World’s Birds Report

    The State of the World’s Birds, an annual review of environmental resources has revealed that the population of 48% of the 10,994 surviving species of birds is declining.

    State of the World’s Birds

    • The report is published by the Manchester Metropolitan University.
    • It gives an overview of the changes in the knowledge of avian biodiversity and the extent to which it is imperilled.
    • The study draws from BirdLife International’s latest assessment of all birds for the International Union for Conservation of Nature’s Red List.

    What are the key findings of the study?

    • The study found that 5,245 or about 48% of the existing bird species worldwide are known or suspected to be undergoing population declines.
    • While 4,295 or 39% of the species have stable trends, about 7% or 778 species have increasing population trends.
    • It shows 1,481 or 13.5% species are currently threatened with global extinction.

    Where the birds are threatened the most?

    • The more threatened bird species (86.4%) are found in tropical than in temperate latitudes (31.7%).
    • Such hotspots are concentrated in the tropical Andes, southeast Brazil, eastern Himalayas, eastern Madagascar, and Southeast Asian islands.

    What is the importance of birds to ecosystems and culture?

    • Birds contribute toward many ecosystem services that either directly or indirectly benefit humanity.
    • These include provisioning, regulating, cultural, and supporting services.
    • The functional role of birds within ecosystems as pollinators, seed-dispersers, ecosystem engineers, scavengers and predators.
    • They not only facilitate accrual and maintenance of biodiversity but also support human endeavours such as sustainable agriculture via pest control besides aiding other animals to multiply.
    • For instance, coral reef fish productivity has been shown to increase as seabird colonies recovered following rat eradication in the Chagos archipelago.
    • Wild birds and products derived from them are also economically important as food (meat, eggs).

    What are the threats contributing to avian biodiversity loss?

    • The study lists eight factors, topped by land cover and land-use change.
    • The continued growth of human populations and of per capita rates of consumption lead directly to conversion and degradation of primary natural habitats.
    • Deforestation has been driven by afforestation with plantations (often of non-native species) plus land abandonment in parts of the global North, with net loss in the tropics.
    • The other factors are habitat fragmentation, degradation, hunting and trapping.

    Try this PYQ from CSP 2020:

    Q.With reference to India’s Biodiversity, Ceylon frogmouth, Coppersmith barbet, Gray-chinned minivet and White-throated redstart are

    (a) Birds

    (b) Primates

    (c) Reptiles

    (d) Amphibians

     

    [wpdiscuz-feedback id=”1zhy7sfg15″ question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • What are W Bosons?

    Researchers from Collider Detector at Fermilab (CDF) Collaboration, in the US, announced that they have made a precise measurement of the mass of the so-called W boson.

    Do you know?

    There are four fundamental forces at work in the universe: the strong force, the weak force, the electromagnetic force, and the gravitational force. They work over different ranges and have different strengths. Gravity is the weakest but it has an infinite range.

    What is W Boson?

    • Discovered in 1983, the W boson is a fundamental particle.
    • Together with the Z boson, it is responsible for the weak force, one of four fundamental forces that govern the behaviour of matter in our universe.
    • Particles of matter interact by exchanging these bosons, but only over short distances.
    • The W boson, which is electrically charged, changes the very make up of particles.
    • It switches protons into neutrons, and vice versa, through the weak force, triggering nuclear fusion and letting stars burn.
    • This burning also creates heavier elements and, when a star dies, those elements are tossed into space as the building blocks for planets and even people.

    Debate over W Boson’s mass

    • The weak force was combined with the electromagnetic force in theories of a unified electroweak force in the 1960s, in an effort to make the basic physics mathematically consistent.
    • But the theory called for the force-carrying particles to be massless, even though scientists knew the theoretical W boson had to be heavy to account for its short range.
    • Theorists accounted for the mass of the W by introducing another unseen mechanism. This became known as the Higgs mechanism, which calls for the existence of a Higgs boson.

    What is the news?

    • CDF researchers stated that this precisely determined value did not match with what was expected from estimates using the standard model of particle physics.
    • This result is highly significant because this implies the incompleteness of the standard model description.
    • This is a major claim, since the standard model has been extraordinarily successful in the past decades.
    • Hence, physicists are looking for corroboration from other, independent, future experiments.

    What is the standard model of elementary particle physics?

    • The Standard Model of particle physics is the theory describing three of the four known fundamental forces (the electromagnetic, weak, and strong interactions while omitting gravity) in the universe and classifying all known elementary particles.
    • It is a theoretical construct in physics that describes particles of matter and their interaction. Ex. Proton, Neutron, Electron etc.
    • It is a description that views the elementary particles of the world as being connected by mathematical symmetries, just as an object and its mirror image are connected by a bilateral (left–right) symmetry.
    • These are mathematical groups generated by continuous transformations from, say, one particle to another.
    • According to this model there are a finite number of fundamental particles which are represented by the characteristic “eigen” states of these groups.
    • The particles predicted by the model, such as the Z boson, have been seen in experiments and the last to be discovered, in 2012, was the Higgs boson which gives mass to the heavy particles.

    Why is the standard model believed to be incomplete?

    • The standard model is thought to be incomplete because it gives a unified picture of only three of the four fundamental forces of nature and it totally omits gravity.
    • So, in the grand plan of unifying all forces so that a single equation would describe all the interactions of matter, the standard model was found to be lacking.
    • The other gap in the standard model is that it does not include a description of dark matter particles.

    How are the symmetries related to particles?

    • The symmetries of the standard model are known as gauge symmetries, as they are generated by “gauge transformations” which are a set of continuous transformations (like rotation is a continuous transformation).
    • Each symmetry is associated with a gauge boson.
    • For example, the gauge boson associated with electromagnetic interactions is the photon.
    • The gauge bosons associated with weak interactions are the W and Z bosons. There are two W bosons — W+ and W-.

    What is the main result of the recent experiment?

    • The recent experiment at CDF, which measured the mass of the W boson as 80,433.5 +/- 9.4 Mev/c2, which is approximately 80 times the mass of a hydrogen nucleus.
    • This came out to be more than what is expected from the standard model.
    • The expected value using the standard model is 80,357 +/- 8 MeV/c2 .
    • Thus, the W boson mass itself is a prediction of the standard model.
    • Therefore, any discrepancy in its mass means a lack of self-consistency in the standard model.

    What is the discrepancy they obtained?

    • The mass discrepancy of the W boson needs to be checked and confirmed to the same accuracy by other facilities, for example, the Large Hadron Collider (LHC).

    Where do we stand now in terms of new physics?

    • New physics is in the air, and experiments have been gearing up for some years now to detect new particles.
    • With its high-precision determination of the W boson mass, the CDF has struck at the heart of the standard model.
    • So it is a significant finding and if this is confirmed by the LHC and other experiments, it will throw open the field for ideas and experiment.

     

     

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  • What is the Xiaomi Scam?

    Last week, the Enforcement Directorate had seized Rs 5551.27 crore ($725 million) from the local bank accounts of the Chinese smartphones company, Xiaomi.

    Unfolding the Xiaomi Scam

    • Xiaomi faces charges of having made illegal remittances to foreign entities by passing them off as royalty payments.
    • It is a charge that Xiaomi has been continuously facing in India.
    • The ‘royalty and licence fee’ paid by Xiaomi India were not being added to the transaction value of the goods imported by the company and its contract manufacturers.
    • By not adding “royalty and licence fee” into the transaction value, Xiaomi was evading Customs duty.

    What is the recent probe?

    • The Enforcement Directorate has seized the bank account assets from Xiaomi Technology India, under the provisions of Foreign Exchange Management Act (FEMA.
    • The company had remitted over Rs 5500 crore to foreign-based entities, including one Xiaomi group entity, in the guise of royalty payments.
    • Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities.

    Xiaomi’s response

    • Xiaomi, for its part, said that it is committed to working closely with government authorities to clarify any misunderstandings.
    • It argued that the royalty payments and statements to the bank are all legit and truthful and were made for the in-licensed technologies and IPs used in our Indian version products.
    • It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments.
    • But it is a typical corporate response, something on the lines that Xiaomi did on the previous occasion too.

    How has China responded?

    • China firmly support its companies in protecting their lawful rights and interests.
    • It urged India to provide a fair, just and non-discriminatory business environment for Chinese companies making investment and operating in the country.
    • It is visible that China has made a dovish statement as they usually do.
    • Xiaomi now has alleged its top executives faced threats of “physical violence” and coercion during questioning by ED.

    Indian govt on strong wicket

    • Indian governmental authorities have made it clear that the Chinese companies were not being targeted.
    • And financial misdemeanours had indeed been committed by these companies.
    • The government has also explained the various cases in details and what it has seized so far.
    • But the Chinese companies seem to be playing the victim card.

    Back2Basics: Directorate of Enforcement (ED)

    • ED is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime (esp Money Laundering) in India.
    • It is part of the Department of Revenue of the Ministry of Finance.
    • It is composed of officers from the Indian Revenue Service, Indian Police Service and the Indian Administrative Service as well as promoted officers from its own cadre.
    • The total strength of the department is less than 2000 officers out of which around 70% of officials came from deputation from other organizations while ED has its own cadre, too.
    • The prime objective of the Enforcement Directorate is the enforcement of two key Acts namely:
    1. Foreign Exchange Management Act 1999 (FEMA) and
    2. Prevention of Money Laundering Act 2002 (PMLA)

     

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  • What is Monkeypox?

    The UK health authorities have confirmed a case of Monkeypox, which is a virus passed from infected animals such as rodents to humans, in someone with a recent travel history to Nigeria where they are believed to have caught it.

    What is Monkeypox?

    • The monkeypox virus is an orthopoxvirus, which is a genus of viruses that also includes the variola virus, which causes smallpox, and vaccinia virus, which was used in the smallpox vaccine.
    • It causes symptoms similar to smallpox, although they are less severe.
    • While vaccination eradicated smallpox worldwide in 1980, monkeypox continues to occur in a swathe of countries in Central and West Africa, and has on occasion showed up elsewhere.
    • According to the WHO, two distinct clade are identified: the West African clade and the Congo Basin clade, also known as the Central African clade.

    Its origin

    • Monkeypox is a zoonosis, that is, a disease that is transmitted from infected animals to humans.
    • Monkeypox virus infection has been detected in squirrels, Gambian poached rats, dormice, and some species of monkeys.
    • According to the WHO, cases occur close to tropical rainforests inhabited by animals that carry the virus.

    Symptoms and treatment

    • Monkeypox begins with a fever, headache, muscle aches, back ache, and exhaustion.
    • It also causes the lymph nodes to swell (lymphadenopathy), which smallpox does not.
    • The WHO underlines that it is important to not confuse monkeypox with chickenpox, measles, bacterial skin infections, scabies, syphilis and medication-associated allergies.
    • The incubation period (time from infection to symptoms) for monkeypox is usually 7-14 days but can range from 5-21 days.
    • There is no safe, proven treatment for monkeypox yet.

     

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  • Debate over Front of Pack Labelling (FoPL) of Packaged Food

    The Food Safety and Standards Authority of India (FSSAI) is expected to issue a draft regulation for labels on front of food packets.

    What is FoPL?

    • In India, packaged food has had back-of-package (BOP) nutrient information in detail but no FoPL.
    • Counter to this, FoPL can nudge people towards healthy consumption of packaged food.
    • It can also influence purchasing habits.
    • The study endorsed the HSR format, which speaks about the proportions of salt, sugar, and fat in food that is most suited for consumers.
    • Countries such as the UK, Mexico, Chile, Peru, Hungary, and Australia have implemented FoPL systems.

    What warranted such rating in India?

    • Visual bluff: A lot of Indian consumers do not read the information available at the back of the packaged food item.
    • Burden of NCDs: Also, India has a huge burden of non-communicable diseases that contributes to around 5.87 million (60%) of all deaths in a year.
    • Healthy dietary choices: HSR will encourage people to make healthy choices and could bring a transformational change in the society.
    • Supreme Court order: A PIL seeking direction to the government to frame guidelines on HSR and impact assessment for food items and beverages was filed in the Supreme Court in June 2021.

    Which category of food item will have HSR?

    • All packaged food items or processed food will have the HSR label.
    • These will include chips, biscuits, namkeen, sweets and chocolates, meat nuggets, and cookies.
    • However, milk and its products such as chenna and ghee are EXEMPTED as per the FSSAI draft notified in 2019.

    Will there be pushback from food industry?

    • Negative warning: Some experts opposed the use of the HSR model in India, suggesting that consumers might tend to take this as an affirmation of the health benefits rather than as a negative warning of ill effects.
    • Lack of awareness: This is significant because there is lack of awareness on star ratings related to consumer products in India.
    • Impact on Sale: Certain organisations fear it might affect the sale of certain food products.

    When will the rating come into force?

    • FSSAI’s scientific panel recommends voluntary implementation of HSR format from 2023 and a transition period of four years for making it mandatory.
    • It noted that the proposed thresholds are in alignment with the models implemented in other countries and ‘WHO population nutrient intake goals recommendations’.
    • FSSAI will analyse the nutritional information in 100 mg of packaged food.
    • The food safety compliance system licensing application portal will have a module for generating certificates wherein a licensee can enter details of a product.

     

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  • What are India’s plans to avert a Wheat Crisis?

    On May 4, the government lowered its wheat production estimates by 5.7% to 105 million tonnes (MT) from the projected 111.32 MT for the crop year ending June.

    Decline in wheat production

    • India is the second largest producer of wheat in the world, with China being the top producer and Russia the third largest — Ukraine is the world’s eighth largest producer of wheat.
    • After five straight years of a bumper wheat output, India has had to revise downwards its estimated production.
    • Unprecedented heatwaves across the north, west and central parts of the country, and March and April being the hottest in over 100 years, have caused substantial loss to the yield.
    • Researchers attributed the lower estimates to “early summer” affecting the crop yields in States, especially Punjab, Haryana and Uttar Pradesh.

    Why is there a decline in govt procurement?

    • Ukrainian war: Private traders have been prompted to buy more wheat from farmers as the price of wheat at the international level has shot up due to Ukrainian war.
    • Higher prices: A large quantity of wheat was being bought by traders at a higher rate than the minimum support price (MSP).
    • Hoarding by farmers and traders: Also, farmers are holding on to some quantity of wheat, expecting higher prices for their produce in the near future.

    How will this impact the public distribution of grain?

    • Wheat procurement is undertaken by the state-owned Food Corporation of India (FCI) and other agencies at MSP to meet the requirements under the Public Distribution System (PDS).
    • Other running welfare schemes is the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) introduced during the pandemic.
    • The government has revised the grain allocation under PMGKAY for May to September 2022.
    • According to the new guidelines, the FCI will fill the gap left by wheat with an increased allocation of rice.
    • Pointing out that from next year, fortified rice will be distributed to the entire Public Distribution System (PDS).

    Will domestic wheat prices be hit?

    • As government wheat procurement has dipped, concerns are being raised about the stability of prices in the country.
    • The availability of grain for internal consumption, many agri-experts argue should be a priority.
    • The government has dismissed concerns about both prices and stocks, asserting that India is in a comfortable situation with the overall availability of grains.
    • India has enough stocks to meet the minimum requirement for next one year for meeting the requirement of welfare schemes.

    How is the global supply situation shaping up?

    • In order to meet the gap created by reduced Russian and Ukrainian exports, importers are turning to alternative markets.
    • Wheat-producing countries like India are looking to increase exports.

    Will farmers benefit?

    • Farmers will certainly benefit from the scenario as they are being offered a price above the MSP.
    • Amid the Russia-Ukraine crisis, new markets in countries like Israel, Egypt, Tanzania and Mozambique have opened up for India.
    • However, if private traders continue to buy above MSP, eventually that could stoke inflation.
    • More private buying of wheat will help India expand the agri-export basket to new countries, riding the current crisis situation.
    • This trade relationship will stay even when the global crisis is over, which means farmers will get about 10%-15% extra price as market prices are ruling above MSP.

    What about export plans?

    • After Egypt, Turkey has also given approval for the import of Indian wheat.
    • India has been eyeing deals with new export markets in European Union countries too.
    • Despite the crop loss and revision of the output estimate, the Centre maintained that no curbs would be placed on wheat exports and that it was facilitating traders.

     

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  • What is Direct Seeding of Rice (DSR)?

    The Punjab government recently announced Rs 1,500 incentive per acre for farmers opting for Direct Seeding of Rice (DSR), which is known for saving water.

    What is DSR technique?

    • In transplanting, farmers prepare nurseries where the paddy seeds are first sown and raised into young plants.
    • These seedlings are then uprooted and replanted 25-35 days later in the main field.
    • Paddy seedlings are transplanted on fields that are “puddled” or tilled in standing water using tractor-drawn disc harrows.
    • In DSR, there is no nursery preparation or transplantation. The seeds are instead directly drilled into the field by a tractor-powered machine.

    How much water is required to grow one kg rice?

    • Paddy is non-shelled rice that farmers grow and sell in mandis and then after milling paddy rice is prepared.
    • According to the studies, around 3,600 litres to 4,125 litres of water is required to grow one kg rice depending upon the paddy variety.
    • Long duration varieties consume more water.
    • In Punjab, 32% area is under the long duration (around 158 days) paddy varieties, and the rest comes under paddy varieties that take 120 to 140 days to grow.
    • So, on an average 3,900 to 4,000 litres water is required to grow one kg rice in the state.

    How much water is used in Punjab every year to grow rice?

    • In 2020-21, Centre procured 203 lakh tonnes of paddy from Punjab.
    • After milling, this procured paddy resulted in 135.98 lakh tonnes of rice.
    • Since studies put average water required to produce one kg rice at 4,000 litres, so in one year – based on last year’s estimate – Punjab needed 5,400 billion litres of water to produce 135 lakh tonnes rice.

    How much water can DSR help save?

    • DSR technique can help save 15% to 20% water.
    • In some cases, water saving can reach 22% to 23%.
    • With DSR, 15-18 irrigation rounds are required against 25 to 27 irrigation rounds in traditional method.
    • Since area under rice in Punjab is almost stagnant, DSR can save 810 to 1,080 billion litres water every year if entire rice crop is brought under the technique.

    Are there any other benefits of DSR tech?

    • DSR can solve labour shortage problem because as like the traditional method it does not require a paddy nursery and transplantation of 30 days old paddy nursery into the main puddled field.
    • With DSR, paddy seeds are sown directly with machine.
    • DSR offers avenues for ground water recharge as it prevent the development of hard crust just beneath the plough layer due to puddled transplanting.
    • It matures 7-10 days earlier than puddle transplanted crop, therefore giving more time for management of paddy straw.
    • Research trials indicated that yield, after DSR, are one to two quintals per acre higher than puddled transplanted rice.

    Getting optimum results

    • Experts said that with DSR technique, which is called ‘tar-wattar DSR’ (good soil moisture), farmers must sow paddy only after pre-sowing (rauni) irrigation and not in dry fields.
    • Further, the field should be laser levelled.
    • They said that spraying of herbicide must be done simultaneously along with sowing, and the first irrigation, which is done at 21 days after sowing.

    Limitations of the DSR

    • Suitability of soil is the most important factor as farmers must not sow it in the light-textured soil.
    • This technique is suitable for medium to heavy textured soils including sandy loam, loam, clay loam, and silt loam which accounts for around 80% area of the state.
    • It should not be cultivated in sandy and loamy sand as these soils suffer from severe iron deficiency, and there is higher weed problem in it.
    • Also, avoid direct seeding of rice in fields which are under crops others than rice (like cotton, maize, sugarcane) in previous years as DSR in these soils is likely to suffer more from iron deficiency and weed problems.

     

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  • ISRO’s goal for Venus Mission

    India’s Venus mission has been conceived. The project report for ‘Shukrayaan-I’ – the name given to ISRO’s Venus mission

    About Venus

    • Venus is the second planet from the Sun and is Earth’s closest planetary neighbor.
    • It’s one of the four inner, terrestrial (or rocky) planets, and it’s often called Earth’s twin because it’s similar in size and density.
    • Venus has a thick, toxic atmosphere filled with carbon dioxide and it’s perpetually shrouded in thick, yellowish clouds of sulphuric acid that trap heat, causing a runaway greenhouse effect.
    • It’s the hottest planet in our solar system, even though Mercury is closer to the Sun.
    • Surface temperatures on Venus are about 900 degrees Fahrenheit (475 degrees Celsius) – hot enough to melt lead.
    • Venus has crushing air pressure at its surface – more than 90 times that of Earth – similar to the pressure you’d encounter a mile below the ocean on Earth.

    Do you know?

    Venus rotates on its axis backward, compared to most of the other planets in the solar system. This means that, on Venus, the Sun rises in the west and sets in the east, opposite to what we experience on Earth. (It’s not the only planet in our solar system with such an oddball rotation – Uranus spins on its side.)

    What is Shukrayaan-I Mission?

    • Shukrayaan will be India’s first orbiter mission to Venus after sending similar missions to the Moon and Mars.
    • The mission aims to study the surface of the hottest planet in our solar system and unravel the mysteries under the Sulphuric Acid clouds enveloping it.
    • The orbiter is the third mission announced to the inferno world of Venus after NASA announced two probes followed by a spacecraft by the European Space Agency.
    • The probes will investigate the world looking for clues to understand the destructive past of Earth’s mysterious twin, which scientists believe once had vast reserves of water similar to our planet.

    Stated objectives

    • Investigation of the surface processes and shallow sub-surface stratigraphy, including active volcanic hotspots and lava flows
    • Studying the structure, composition, and dynamics of the atmosphere
    • Investigation of solar wind interaction with the Venusian Ionosphere

    Delay with the launch

    • The ISRO is eyeing the December 2024 window for launch with orbital maneuvers planned for the following year.
    • This is when earth and Venus would be so aligned that the spacecraft could be put in the neighboring planet’s orbit using a minimum amount of propellant.
    • The next similar window would be available in 2031.

     

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  • India must seize the trade opportunity opening now

    Context

    Slower global growth, an adverse geopolitical environment, the shadow of recurring waves of the pandemic and prolonged supply chain issues are likely to weigh on export growth this year.

    Trade growth in 2021 and uncertainties in 2022

    • The year 2021 was a record one for trade despite the pandemic.
    • In terms of volumes, merchandise trade rose 9.8 per cent, while in dollar terms, it grew 26 per cent.
    • The value of commercial services trade was also up 15 per cent.
    • India has had a good export run in line with global trends, witnessing record goods exports of $419 billion, while touching $250 billion in services exports.
    • However, global growth forecasts have now been pared down.
    • Slower global growth, an adverse geopolitical environment, the shadow of recurring waves of the pandemic and prolonged supply chain issues are likely to weigh on export growth this year.

    Taping into opportunities

    • Ukraine and Sri Lanka are major exporters of agricultural products and the vacuum created by their limited presence in global trade will open up agricultural export opportunities for India.
    • This will not only spur overall exports but will also help to support the recovery of the agrarian economy through higher realisations.
    • Tea and wheat: As many as 25 African countries import more than one-third of their wheat from Russia and Ukraine and for 15 of them, the share exceeds 50 per cent.
    • Sri Lanka is also a major player in the global tea market and produces around 300 million kg annually.
    • Almost 98 per cent of its annual production is exported.
    • India, the second-largest producer of tea with an annual production of 900 million kg, is in a good position to exploit the opportunity and fill the gap.
    • Textile: Apart from tea and wheat, newer export opportunities have arisen for textiles.
    • Sri Lanka exports $5.42 billion worth of garments and prolonged power cuts in the island nation will hurt its production and export capacity.

    Suggestions

    • 1] Work on non-tariff barriers: One, work on non-tariff barriers for agricultural trade with a special focus on harmonising the sanitary and phytosanitary (SPS) requirements.
    • 2] Autonomy in tea sector: To support tea exports, traditional tea boards are seeking a greater role and autonomy for optimising the development, promotion, and research in the sector.
    • Quicker implementation of the proposed Tea Promotion and Development Act is of utmost importance.
    • 3] Integration with global supply chains: India must double down on its integration with global supply chains.The commerce ministry has negotiated a slew of trade deals.
    • 4] Reduce tariff rates for intermediate inputs: Tariff rates for intermediate inputs should be reduced to either zero or should be negligible for India to become an attractive location for assembly activities.
    • 5] Realignment of specialisation patterns: India must persist with the creation of an enabling ecosystem that realigns its specialisation patterns towards labour-intensive processes and product lines.
    • The labour market reforms must be taken to their logical conclusion.
    • 6] Pro-active FDI policy: A continuous and pro-active FDI policy is also critical as foreign capital and technology are key enablers for entry into global production networks even as local firms play a role as subcontractors and suppliers of intermediate inputs to MNEs.
    • 7]Power supply and logistical bottlenecks: Lastly, exports could suffer if basic issues such as availability of power and logistical bottlenecks keep rearing their ugly heads.
    • The Economic Survey 2019 had recommended that low levels of service link costs (costs related to transportation, communication, and other tasks involved in coordinating the activity etc) are prerequisites to strengthen their participation in GVCs.
    • This should not be neglected.

    Conclusion

    If India were to tap export opportunities in developed markets, it must act on the suggestions above.

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  • Let’s make GST a good and simple tax

    Context

    The GST has been a remarkable achievement and a unique experiment in cooperative federalism. In this, both the Union and the state governments gave up their tax autonomy in favour of harmonising domestic trade taxes.

    Multiple rates: A major shortcoming in the structure of GST

    •  One of the most important shortcomings in the structure of GST is multiple rates.
    • The committee headed by the Chief Economic Adviser estimated the tax rate at 15-15.5 per cent.
    • It further recommended that in keeping with growing international practice, India should strive towards a single rate in the medium-term to facilitate administrative simplicity and compliance, but in the immediate context, it should have a three-tier structure (excluding zero).
    • The structure finally adopted was to have four rates of 5, 12, 18, and 28 per cent besides zero, though almost 75 per cent of the revenues accrue from the 12 and 18 per cent slabs.
    • Why single rate structure? The reasons for adopting a single rate structure in most countries are to have a simple tax system, prevent misclassifications and litigations arising therefrom, and to avoid an inverted duty structure of taxes on inputs exceeding those on outputs requiring detailed scrutiny and refunds.
    • Why multiple rates? The main reason for rate differentiation is equity.
    • But it is argued that this is an inefficient way of targeting benefits for the poor. 
    • Although the exempted and low-rated items are consumed relatively more by the poor, in absolute terms, the consumption may be more by the rich. 

    Suggestions

    • Focus on the expenditure side: The ideal way of targeting the benefits to the poor is on the expenditure side, through targeted cash transfers to vulnerable groups and providing quality education and healthcare.
    • Of course, unprocessed food items have to be exempted for reasons of administrative difficulty, but the list should be kept small.
    • Right time to rationalise the rates: Now, in fact, is the opportune time to rationalise the rate structure.
    • The economy is in recovery mode and more importantly, GST revenues have shown reasonably high buoyancy with collections of over Rs 1 lakh crore in the last 10 months and touching a record of Rs 1.68 lakh crore in April 2022.
    • Role of e-invoicing: The revenue increase has not come about only due to the economic recovery.
    •  The more important reason seems to be that at last, the GSTN has been able to stabilise the technology platform.
    • Mandating the issue of e-invoicing for all businesses above Rs 100 crore has enabled better invoice matching and detection of fake invoices that were used to claim the input tax credit.
    • This has helped to improve tax compliance and has also enabled better enforcement.
    • With time, the GSTN should be able to enforce e-invoice requirements on all businesses above Rs 10 crore, which will cover more than 95 per cent of taxpayers.
    • Dealing with the excessive rate differentiation: The GST council is concerned about the problems arising from excessive rate differentiation and has set up a seven-member ministerial panel .
    • But it has been widely reported that the committee is thinking of increasing the lower tax rate from 5 per cent to 8 per cent and moving some essential items from the 5 per cent category to the 3 per cent slab.
    • This will be retrograde because a rate category will be added. The need of the hour is to reduce the rate categories.
    • Merge 12 and 18 per cent categories: It would be preferable to merge the 12 per cent and 18 per cent categories into a 15-16 per cent slab and move the items in the 5 per cent category to the 8 per cent slab and remove the 28 per cent category altogether. 

    Conclusion

    The merger of 12 and 18 per cent categories will result in the GST structure with two rates and as the cesses will cease after 2026 when the compensation requirement is over, it will really become a “good and simple tax”.

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