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GS Paper: GS3

  • State budgets belies the hopes of public-spending-led recovery

    The article highlights the trends emerging from the State budgets which dashes the hopes of public-spending led economic recovery.

    State-level budget trends

    • Over the past few weeks, several state governments have presented their budgets for the financial year 2021-22.
    • The states, put together, account for a larger share of general government spending than the Centre.
    • States’ spending stance is pivotal to the hopes of a government spending-led economic recovery.

    5 Broad trends from the state budgets

    • The broad state-level budget trends are based on 11 states that account for a little over 60 per cent of India’s GDP.

    1) Offsetting the additional spending by Centre

    • There is a collapse in states’ revenues and transfers from the Centre.
    • Along with it, there is a “reluctance” among some states to borrow more to spend.
    • Thus, the aggregate level spending by these states in 2020-21 will end up being lower than what they had budgeted for before the onset of the pandemic.
    • The revised estimates peg their total expenditure to decline by around 6 per cent in 2020-21 from their budget estimates.
    • If these trends were to hold for the other states as well, then it would imply that the additional spending by the central government, over and above its budget estimate is likely to be offset by the decline in spending by states.

    2) From revenue surplus to revenue deficit

    • This year, states which typically run revenue surpluses will run revenue deficits.
    • The collapse in revenues meant that states that usually borrow to finance capital expenditure have had to borrow to finance their recurring expenditure (revenue expenditure) as well.
    • As a consequence, capital spending by states has been cut sharply.
    • States, though, expect the situation to reverse in the coming fiscal year, with most projecting a return to revenue surpluses even as the Centre will continue to run revenue deficits.
    • This anomaly is unlikely to be resolved unless the root cause of the situation — the nature of the fiscal compact between the Centre and the states — is addressed.

    3) Reluctance by states to borrow

    • The Centre had raised the ceiling on their market borrowings from 3 to 5 per cent of GSDP.
    • Of this 2 percentage point increase in the borrowing limit, part was unconditional while the remaining was subject to fulfilling Centre-mandated reforms.
    • As per ICRA’s estimate, 17 states qualified based on the One Nation One Ration Card reforms, 15 qualified based on the ease of doing business reforms, seven partially completed power sector reforms, while six had completed the urban local body reforms.
    • But, it is only the low-income states of Bihar, Rajasthan and Madhya Pradesh with already stretched finances that seem to have availed the additional borrowing space.
    • The high-income states of Gujarat, Maharashtra and Karnataka, all of whom had greater fiscal headroom going to the crisis, and were better placed to borrow more and spend, have not done so.

    4) Aggressive fiscal consolidation

    • As is the case with the Centre, states have, remarkably, budgeted for aggressive fiscal consolidation next year.
    • The average fiscal deficit across these states is expected to fall by more than 1 percentage point of GSDP, more than twice the decline recommended by the 15th finance commission.

    5) Ambitious revenue assumptions

    • The aggressive consolidation next year is expected to be achieved not by expenditure compression, as is the case with the Centre, but by significant revenue enhancement.
    • However, some revenue assumptions are quite ambitious, to say the least — some states have pegged their GST and VAT collections to grow far in excess of 30 per cent in 2021-22.
    • A deterioration in fiscal marksmanship will mean that expenditure in the coming fiscal year will also end up being lower than what has been budgeted for.

    Consider the question “The pandemic has upended the States’ fiscal space, which is evident in their budgets. In light of this, examine the trends emerging from the budgets of the States and their implications for the economy.”

    Conclusion

    Subdued general government spending during these tumultuous years heightens the risks to economic recovery. Considering the possibility of the economy exiting from this period with lower medium-term growth prospects, there is a strong case for greater government spending during these years.

  • India should abandon its suspicion of digital currency

    The article discusses the advantages of central bank digital currency which could combine the advantages of both fiat money and cryptocurrency.

    India’s suspicion of the cryptocurrencies

    • In 2018, the Reserve Bank of India prohibited regulated entities from providing services to anyone who deals with or settles trades in any virtual currency.
    • This was effectively banning Bitcoin trading in the country.
    • The Supreme Court lifted this restriction in 2020.
    • There were rumours earlier this year that a new law was in the works that would make it a crime to possess, issue, mine, trade or transfer crypto assets in India.

    Thinking of digital currencies as asset not currency

    • There are concerns over the speculative nature of cryptocurrencies.
    • There are also law enforcement concerns around how digital currencies make it hard for the police to track down criminals.
    • One of the most important attributes of a currency is that it should be a stable store of value, and Bitcoin is anything but.
    • To deal with this difficulty, it will be helpful to think of digital currencies as just another asset—the digital equivalent of a scarce commodity that, like gold, certain collectors prize.

    Difference between working of banks and cryptocurrencies

    • Our financial system relies on banks to record transactions.
    • It is a ‘permissioned’ ledger system in that only trusted intermediaries-registered banks under the supervision of the central bank-can make changes to the ledgers to certify that a given transaction has been completed.
    • Cryptocurrencies, on the other hand, are ‘permissionless’ systems that need no intermediary.
    • Instead of a centralized ledger, transactions are recorded on a distributed database.
    • A purely permissionless system has no need of banks.

    Role of banks in maintaining financial health

    • Central banks are not just intermediaries managing the great big financial ledger of the country, they are responsible for its financial health.
    • To perform this function, they need to be able to take money out of the system when required or put money back into economic circulation.
    • None of this is possible in a purely permissionless system.

    Advantages of digitally native currencies

    • Digitally native currencies are programmable and capable of being incorporated into smart contracts, offering various opportunities for innovative digital solutions.
    • Since they can be directly allotted to citizens who don’t have a bank account, they are ideal for financial inclusion.
    • Being digitally auditable, transactions can be audited, reducing the scope for illicit activity.
    • The challenge is one of integrating the best that digital currencies have to offer into the traditional financial paradigm.

    Central bank digital currencies as an alternative

    • CBDCs are a completely re-engineered form of money that use a distributed ledger as their underlying technology layer, but are backed by suitable amounts of monetary reserves, just like normal fiat currency.
    • Many countries have been toying with the idea of a central bank digital currency (CBDC).
    • They are run by central banks along with select financial entities responsible for managing the distributed ledger.
    • The best CBDCs will converge the best of both worlds—the programability and security of cryptocurrencies and the reserve-backed stability of fiat currency.
    • Several countries are already testing this concept.

    How central bank digital currency differs from cryptocurrency? What are its advantages?”

    Conclusion

    Banning technology has never made it go away. Instead, let’s make an effort to better understand it, and having done so, do all we can to create the digital currency our country needs.

  • Responsible and ethical AI

    The article highlights the challenges and opportunities offered by the Artificial Intelligence and suggests the ways to deal with them.

    AI as a part of our life

    • AI is embedded in the recommendations we get on our favourite streaming or shopping site; in GPS mapping technology; in the predictive text that completes our sentences when we try to send an email or complete a web search.
    • And the more we use AI, the more data we generate, the smarter it gets.
    • In just the last decade, AI has evolved with unprecedented velocity.

    How AI could help us

    • AI has helped increase crop yields, raised business productivity, improved access to credit and made cancer detection faster and more precise.
    • It could contribute more than $15 trillion to the world economy by 2030, adding 14% to global GDP.
    • Google has identified over 2,600 use cases of “AI for good” worldwide.
    • A study published in Nature reviewing the impact of AI on the Sustainable Development Goals (SDGs) finds that AI may act as an enabler on 134 of all SDG targets.

    Concerns with AI

    • Yet, the study in Nature also finds that AI can actively hinder 59 — or 35% — of SDG targets.
    • AI requires massive computational capacity, which means more power-hungry data centres — and a big carbon footprint.
    • AI could compound digital exclusion.
    • Many desk jobs will be edged out by AI, such as accountants, financial traders and middle managers.
    • Without clear policies on reskilling workers, the promise of new opportunities will in fact create serious new inequalities.
    • Investment is likely to shift to countries where AI-related work is already established widening gaps among and within countries.
    • AI also presents serious data privacy concerns. 
    • We shape the algorithms and it is our data AI operate on.
    • In 2016, it took less than a day for Microsoft’s Twitter chatbot, “Tay”, to start spewing egregious racist content, based on the material it encountered.

    Way forward

    • Without ethical guard rails, AI will widen social and economic schisms, amplifying any innate biases.
    • Only a “whole of society” approach to AI governance will enable us to develop broad-based ethical principles, cultures and codes of conduct.
    • Given the global reach of AI, such a “whole of society” approach must rest on a “whole of world” approach.
    • The UN Secretary-General’s Roadmap on Digital Cooperation is a good starting point.
    • This approach lays out the need for multi-stakeholder efforts on global cooperation.
    • UNESCO has developed a global, comprehensive standard-setting draft Recommendation on the Ethics of Artificial Intelligence to Member States for deliberation and adoption.
    • Many countries, including India, are cognisant of the opportunities and the risks, and are striving to strike the right balance between AI promotion and AI governance.
    • NITI Aayog’s Responsible AI for All strategy, the culmination of a year-long consultative process, is a case in point.

    Consider the question “What are the ways in which Artificial Intelligence in helping humanity? What are the concerns with the promotion and the governance of AI?”

    Conclusion

    Chellenging part starts where principles meet reality that the ethical issues and conundrums arise in practice, and for which we must be prepared for deep, difficult, multi-stakeholder ethical reflection, analyses and resolve. Only then will AI provide humanity its full promise.

  • World Air Quality Report, 2020

    Delhi remained the most polluted capital city in the world but India, on the whole, had improved its average annual PM 2.5 (particulate matter) levels higher in 2020 than in 2019, according to a report from World Air Quality Report Air.

    Try this question from CS Mains 2015:

    Q.Mumbai, Delhi and Kolkata are the three megacities of the country but air pollution is a much more serious problem in Delhi as compared to the other two. Why is this so?

    World Air Quality Report

    • It is released by a Swiss air quality technology company IQAir.
    • IQAir is an air quality technology company that since 1963 seeks to empower individuals, organizations and communities to breathe cleaner air through information, collaboration and technology solutions.
    • The 2020 Report is based on PM2.5 data from 106 countries that have been measured by ground-based monitoring stations.

    Highlights of the report

    • Of the 14 most polluted cities, 13 were in India.
    • When ranked by cities, Hotan in China was the most polluted, with an average concentration of 110.2 µg/m³, followed by Ghaziabad in Uttar Pradesh at 106.
    • Delhi’s concentration level, based primarily on data from the Central Pollution Control Board, was 84.1 µg/m³ in 2020, a 15% improvement from the 98.6 µg/m³ recorded in 2019 — a consequence of the lockdown.
    • Bangladesh and Pakistan were the countries in 2020 with worse average PM 2.5 levels than India, says the report.
    • China ranked 11th in the latest report, a deterioration from the 14th in the previous edition of the report. In the 2020 report, 106 countries were evaluated.

  • [pib] Multi-Layer Farming

    ICAR is undertaking location-specific multi-layer farming involving crops of different heights.

    Multi-Layer Farming

    • Multi-layer farming means growing and cultivating compatible plants of different heights on the same field and at the same time.
    • It is generally practised in orchards and plantation crops for the utmost use of solar energy even under high planting density.
    • It is mostly cash crop-based and it includes a combination of vegetables and fruits that can be grown together.

    How it is done?

    • In Multi-layer farming, the crops are grown at different heights on the same land.
    • This farming cannot be done in open fields as shade is required. It is one type of intercropping.
    • Growing plants of different height in the same field at the same time is termed Multi-layer cropping. It is generally practised in orchards and plantation crops for maximum use of solar energy even under high planting density. It is the practice of several crops of varying heights, rooting pattern and duration to cultivate together.
    • The objective is to utilize vertical space more effectively.
    • In this, the tallest components have foliage of strong light and high evaporative demand and shorter components with foliage requiring shade and high humidity.

    Try this PYQ:

    Q.What are the advantages of fertigation in agriculture?

    1.Controlling the alkalinity of irrigation water is possible.
    2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
    3. Increased availability of nutrients to plants is possible.
    4. Reduction in the leaching of chemical nutrients is possible.

    Select the correct answer using the code given below:

    (a) 1, 2 and 3 only

    (b) 1,2 and 4 only

    (c) 1,3 and 4 only

    (d) 2, 3 and 4 only

    Benefits offered

    • Prevent water evaporation from the soil; as an effect, 70% of water is saved.
    • The income per unit area increases substantially
    • Minimize risks of crop yield loss and this system enables a steady supply of farm products the whole round the year.
    • Reduces the impacts of hazards such as high-intensity rainfall, soil erosion, and landslides.
    • Improve the soil characteristics and adds organic matter to the soil.
    • Effective utilization of leaching materials and helps in effective weed control.
    • Provide micro-climate conditions that advantage crops underneath.

    What else?

    : Agricultural Technology Management Agency (ATMA)

    • In addition to this, a Centrally Sponsored Scheme ‘Support to State Extension Programs for Extension Reforms” popularly known as ATMA Scheme is already under implementation since 2005.
    • Presently, the Scheme is being implemented in 691 districts of 28 states & 5 UTs in the country.
    • The scheme promotes a decentralized farmer-friendly extension system in the country.
    • Under the scheme, grants-in-aid are released to the State with an objective to make available the latest agricultural technologies and good agricultural practices in different thematic areas of agriculture and allied areas to farmers including training for multi-layer farming.
    • Training of farmers is one of the eligible activities of the ATMA Scheme.

  • Draft Plastic Waste Management Rules, 2021

    The draft Plastic Waste Management Rules, 2021, issued by the MoEFCC has necessitated a few changes in the country’s handling of its plastic waste.

    Background

    • The Environment Ministry had first notified the Plastic Waste Management Rules in March 2016.
    • It had provisions for effective and improved collection, segregation, processing, treatment and disposal of plastic waste.

    What are the 2021 rules?

    Phasing out Single-use Plastics

    Single-use plastics have been defined under the rules as “a plastic commodity intended to be used once for the same purpose before being disposed of or recycled”.

    • The rules have proposed to ban the manufacture, use, sale, import and handling of some single-use plastic items on a ‘pan India basis.
    • The provisions will also apply to ‘multi-layered packaging’ – involved extensively in e-commerce and deliver services- but will exempt packaging used for imported goods.
    • They shall apply to every waste generator, local body, Gram Panchayat, manufacturer, Importers and producer as well as ‘brand-owner and “plastic waste processor (recycler, co-processor, etc.)
    • Thermoset plastic and Thermoplastic will also fall within the ambit of these rules.
    • These provisions will, however, not apply to commodities (including carrying bags) made of compostable plastic material, according to the rules.

    The draft is proposed to be implemented in three stages starting this year and culminating in mid-2022.

    Stage I

    • The first set of rules propose that each sheet of non-woven plastic carry bag shall not be less than 60 (GSM per square metre) or 240 microns in thickness. A carry bag made of virgin or recycled plastic shall not be less than 120 microns, with effect from the same date.

    Stage II

    • The second stage will come into effect when six categories of single-use plastic — earbuds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, polystyrene (thermocol) for decoration — will be banned for sale, use, manufacture, stocking, import and distribution.

    Stage III

    • In the third stage, the list of banned items will grow to include single-use plastic plates, cups, glasses, cutlery such as forks, spoons, knives, straw, trays, wrapping/packing films around sweet boxes; invitation cards; cigarette packets, plastic/PVC banners less than 100 micron and stirrers.

    Local bodies and state pollution control boards will ensure the implementation and enforcement of these rules.

    What else is covered?

    One, the amendment has extended the applicability of the rules to brand-owner, plastic waste processor, including the recycler, co-processor, etc.  It will also include new definitions of:

    • Non-woven plastic bag
    • Plastic waste processing
    • Single-use plastic (SUP) item
    • Thermoset plastic
    • Thermoplastic

    Try this PYQ:

    Q.In India, ‘extended producer responsibility’ was introduced as an important feature in which of the following?

    (a) The Bio-medical Waste (Management and Handling) Rules, 1998

    (b) The Recycled Plastic (Manufacturing and Usage) Rules, 1999

    (c) The e-Waste (Management and Handling) Rules, 2011

    (d) The Food Safety and Standard Regulations, 2011

    Why such a move?

    • As much as 3.3 million metric tonnes of plastic waste was generated in India in 2018-19, according to the Central Pollution Control Board (CPCB) report 2018-19.
    • The total municipal solid waste generation is 55-65 million tonnes; plastic waste is approximately 5-6 per cent of the total solid waste generated in the country.
    • Goa has the highest per capita plastic waste generation at 60 grams per capita per day, which is nearly double what Delhi generates (37 grams per capita per day).
    • Clearly, we do not know the amount of plastic we generate as a country, as the increase in wealth and affluence contributes to a higher generation of plastic waste.
    • Despite the Plastic Waste Management legislation of 2011, followed by numerous changes in the recent past, most parts of the country lack systematic efforts required to mitigate the risks associated with plastic waste.

    Way ahead

    Managing plastic waste requires effective knowledge, not only among those who produce plastic but also among those who handle it.

    • Brand owners, consumers, recyclers and regulatory authorities need to take long strides in ensuring that we first inventorize the total amount of plastic waste that we generate by means of proper calculations.
    • The second step would be to identify the avenues where the use of plastic can be minimised.
    • Third, the brand owner and manufacturer should try and understand the fates a plastic packaging material would meet after its purpose of packaging has been served.
    • Last, as consumers, we should ensure that all plastic waste leaving our homes is segregated and is not contaminated with food waste.

    Conclusion

    • Plastic, without a doubt, is a miracle commodity that has uses ranging from increasing shelf lives of eatables to medical equipment and automotive.
    • Their waste management needs due attention. And the draft policies is a significant step in this direction.

  • Places in news: Baralacha Pass

    For the first time ever, the Border Roads Organisation (BRO) has started work on reopening the crucial Baralacha Pass in Himachal Pradesh much before schedule to restore connectivity to Leh in Ladakh.

    Note all the Himalayan passes from their N-S sequences.

    Baralacha Pass

    • Bara-lacha la also known as Bara-lacha Pass is a high mountain pass in the Zanskar range connecting the Lahaul district in Himachal Pradesh to Leh district in Ladakh.
    • It is situated along the Leh–Manali Highway.
    • The Bhaga river, a tributary of the Chenab river, originates from Surya Taal lake, which is situated a few kilometres from the pass towards Manali.
    • The native name of Chenab “Chandrabhaga” represents the union of Chandra and Bhaga rivers downstream.
    • The pass also acts as a water-divide between the Bhaga River and the Yunan River.

    Why is this pass so important?

    • The BRO had kept crucial passes open for a longer duration to enable the Army to undertake advanced winter stocking for the thousands of additional troops deployed in Ladakh.
    • The team has traversed a total distance of 20 km in super high-altitude conditions scrupulously crossing the Baralacha La in the Zanskar range on foot amidst sub-zero freezing conditions.
    • Frequent avalanches and slides with 15 to 20 feet of snow accumulation.

  • A high growth plan for Indian agriculture

    The article deals with the issue discussed in the recently published book ‘Revitalising Indian Agriculture and Boosting Farmer Incomes’. It suggests strategies for six Indian states and underlies the importance of the diversified approach to different states.

    Why agriculture is central to Indian economy

    • Agriculture engages close to 42 per cent of the country’s workforce.
    • With its close interlinkage with poverty, it is best positioned to alleviate problems of malnutrition and hunger.
    • In addition, agriculture supplies inputs for other industries.
    • It is critical for triggering a multiplier effect in the economy, where a financially empowered farming community triggers a demand-led growth, particularly for manufactured products and services.
    • There is no doubt that the sector needs to grow not just for those employed in it but also for the economy as a whole.

    Growth strategy needs to take into account diversity across the states

    • The growth process of agriculture should not just more efficient, and inclusive of India’s small and marginal but is also sustainable — both financially and environmentally.
    • But then comes the question of the diversity in Indian states, where they differ as much on factors of production like land and water as they do on access to market opportunities.
    • They even differ in their vulnerabilities to climate and weather changes.
    • This begs the question, should the roadmap not be customised to the needs, vulnerabilities, and resource-base of each state?

    Strategies for six states

    • The recently published book “Revitalising Indian Agriculture and Boosting Farmer Incomes” proposes strategies for six Indian states: Punjab, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar and Odisha.
    • In the six states, three factors explained most of the agrarian growth.
    • One, access to infrastructure — mainly irrigation and roads.
    • Two, diversification to high value agricultural products like fruits, vegetables, and allied activities like dairy and poultry.
    • Three, price incentives or favourable terms of trade.
    • Bringing markets closer to farmers and increasing the efficiency of the value-chains emerged as an important factor that explained agricultural growth in Gujarat, Madhya Pradesh, Odisha, and Bihar.
    • By ensuring timely access to sufficient irrigation, states like Gujarat and Punjab could explain their high performances.
    • Role of uninterrupted quality power too emerged important in this.
    • Diversification of the agricultural basket of a state was found to strengthen a state’s agri-performance.

    Relation between growth rate and policy reforms

    • The requirement to undertake policy reforms, mainly related to marketing, emerged as a key driver and predictor of growth.
    • The NITI Aayog’s Agricultural Markets and Farmer Friendly Reforms Index — AMFFRI evaluates Indian states on the extent to which each of them undertook required agri-reforms.
    • A low AMFFRI rank implies the state is undertaking desired reforms.
    • It was found that states that undertook reforms, and were thus ranked low on AMFFRI, witnessed a relatively faster agri-GDP growth rate.
    • States which did not undertake required reforms, and thus were ranked high on the AMFFRI witnessed relatively lower agri-GDP growth rates.
    • There were some exceptions: Karnataka, Haryana and Maharashtra.
    • These states undertook reforms, and thus had low AMFFRI ranks, but they witnessed a low agri-GDP growth rate.
    • This is likely to be attributed to the delayed effect of reforms on the agri-performance.

    Way forward

    • As a part of the roadmap, the book makes a case for states to move beyond production-centric approach to a value-chain approach with FPOs at its centre.
    • It highlights importance and requirement of growing public investments in basic infrastructure.
    • And finally, in the longer run, rationalising subsidies via direct income transfer is suggested.

    Consider the question “Despite its comparatively lower contribution to the GDP, agriculture plays a central role in the Indian economy. What are the factors that make agriculture central to the economy? Suggest the pathway to fuel the growth of the sector.”

    Conclusion

    If the government follows this path of investing in infrastructure, ensuring a more diversified agriculture and linking small-holder FPOs with markets, it will pay rich dividends not only to the farming community but also the entire economy.

  • Forestalling the cyber threats India faces

    The article highlights the threat of a cyber attack on India’s critical infrastructure and suggests the need to take preventive measures.

    Targetting the infrastructure

    • The U.S.-based cyber security firm, Recorded Future revealed that the past blackout in Mumbai was linked to the cyber attack from China.
    • Recorded Future had also found an increase in malware attacks targeting the Indian government, defence organisations and the public sector.
    • Also that, coinciding with Chinese incursions in Eastern Ladakh, certain Indian power facilities had been targets of a cyber attack.
    • This indicates that India’s key infrastructure facilities, such as the power sector, are now in the crosshairs of a hostile China.
    • Indian government agencies, such as the National Critical Information Infrastructure Protection Centre (NCIIPC) and the Indian Computer Emergency Response Team (CERT-In) needs to be on its guard.

    Exploiting vulnerabilities

    • China’s cyber offensive is directed against many advanced nations as well.
    • In attempting this, what China is doing is essentially exploiting to perfection the many vulnerabilities that software companies (essentially those in the West), have deliberately left open (for offensive purposes at an opportune time).
    • Exploiting this loophole, and also turning matters on its head, it is companies in the western world that are now at the receiving end of such antics.
    • Chinese cyber espionage sets no limitations on targets.
    • Towards the end of 2020, and as the world prepared for large-scale deployment of COVID-19 vaccines, their attention was directed to vaccine distribution supply chains around the world.

    Way forward

    •  Nations should beware and be warned about how cyber attacks can bring a nation to its knees.
    • This was well demonstrated way back in 2016 through a major attack on Ukraine’s power grid.
    • The Ukraine example should be a wake-up call for India and the world, as in the intervening five years, the sophistication of cyber attacks and the kind of malware available have become more advanced.
    • India, could well be blindsided by Chinese cyber attacks on critical infrastructure if the latter sets out to do so, unless prophylactic measures are taken in time.

    Consider the question “Examine the threat posed by cyber attack on the critical information infrastructure? Suggest the ways to deal with it.”

    Conclusion

    Cyber’ could well be one of China’s main threat vectors employed against countries that do not fall in line with China’s world view. Drawing up a comprehensive cyber strategy, one that fully acknowledges the extent of the cyber threat from China, has thus become an imperative and immediate necessity.

  • Draft E-Commerce Policy

    The Department for Promotion of Industry and Internal Trade (DPIIT) will soon come out with a common acceptable draft e-commerce policy.

    Earlier policy

    • The previous draft in July last year had proposed a regulator, an e-commerce law, periodic audit of companies that store or mirror Indian users’ data overseas.
    • The latest draft calls for streamlining of regulatory processes to ease the burden of compliance for activities related to e-commerce and regulations for data that will provide for sharing mechanism.

    What are the provisions of the new law?

    Data Usage

    • According to a revised draft, the government would lay down principles for the usage of data for industrial development, where such norms do not already exist.
    • They aim to put in place safeguards to prevent misuse and access of data by unauthorized persons.
    • Such safeguards may include regulating the cross-border flow of data pertaining to Indians and transactions taking place in India and the requirement of adequacy audits to be carried out by Indian firms.
    • As per the recent draft policy, violation of safeguards shall be viewed seriously and attract heavy penalties.

    Regulation, exports

    • Conformity assessment procedures will be put in place to verify that goods and services sold on e-commerce platforms meet required standards and technical regulations.
    • The government shall collect information from e-commerce platforms to aid it in making necessary decisions.
    • In order to ensure that e-commerce is not used to defraud customers, registration with an authority identified by the Government shall be mandatory.
    • The policy shall bring e-commerce exports on par with non-e-commerce exports by enabling online grant of drawbacks, advance authorization and GST refund.

    Consumer protection

    • As per the draft, e-commerce operators must ensure to bring out clear and transparent policies on discounts, including the basis of discount rates funded by platforms.
    • Such a move aims to ensure fair and equal treatment.
    • It said consumers have a right to be made aware of all relevant details about the goods and services offered for sale including country of origin, value addition in India etc.
    • In case the seller fails to establish the genuineness of his products within a reasonable time frame, the e-commerce platform shall delist the seller.