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GS Paper: GS3

  • Why India must bargain hard on G7 tax reforms

    The article deals with the issue of global minimum tax and how it matters to India in the changing digital landscape where data is the new oil.

    Two pillars of global taxation reforms endorsed

    • In the just-concluded G7 summit in the UK, the leaders endorsed the global taxation reforms premised on two pillars.
    • One, that the multinational companies with at least a 10 per cent profit margin pay tax in countries where they operate and that would be 20 per cent of any profit above the 10 per cent margin.
    • Two, a global minimum tax rate that envisages that multinational companies pay a tax of at least 15 per cent in each country they operate.

    How companies monetise data

    • The concept of tax on electronic transmission of data across borders was expressly prohibited under multiple WTO declarations.
    • However, in the changed digital landscape, multinational corporations are mining big data, which has economic value, but not paying their fair share of taxes.
    •  Many of these tech firms provide their product for free to users, and based on user engagements, create a detailed profile of the user that would be used to sell ad space to the clients.

    Efforts to find solution to tax avoidance

    • The Union government had rightly introduced an equalisation levy at 2 per cent, targeted at non-resident e-commerce operators with a turnover greater than Rs 2 crore in the Union budget of 2020.
    • India had an equalisation levy since 2016, initially at 6 per cent on specified services like online advertisement or provision of digital advertising space and was levied on non-resident firms, deducted by the payer.
    • In the case of the amended equalisation levy, the responsibility lay with the operator and was applicable to earnings that have been made by selling advertisements based on the data collected within the country.
    • The member-states of the OECD have been trying to find a solution to tax avoidance by multinational corporations under the Base Erosion and Profit Shifting Project since 2015.
    • OECD had built a model around two pillars on which the G7 position has been announced.

    Way forward for India

    • India has to stand its ground.
    • With the largest user base for Facebook, WhatsApp and YouTube, India will not be adequately compensated by the above two steps in global minimum tax.
    • The government must also pass the Personal Data Protection Bill 2019 quickly so that provisions for data localisation, requiring Indian data to be stored and processed in the country are in place.
    •  This could be the ideal way to force tech firms to correctly evaluate the revenue generated from our sovereign data and thus tax it.

    Consider the question “As the world moves towards the global taxation reforms, what are the factors India needs to consider? Also, mention the previous efforts made to find the solution to tax avoidance by the multinational companies.”

    Conclusion

    India must negotiate hard to come to an equitable position on the global tax and avoid as it harbours the largest user base of the social media companies.

  • Embracing cryptocurrency

    As India struggles to come up with an appropriate approach towards cryptocurrencies, the growing trend of the adoption of cryptocurrencies across the world offers a lesson.

    Rising global trend of embracing cryptocurrencies

    • El Salvador became the first country in the world to adopt bitcoin as legal tender.
    • The U.K. has classified cryptocurrency as property.
    • The U.K. has sought to regulate the functioning of crypto-businesses while still imposing some restrictions to protect the interests of investors.
    • On the other hand, while there is no exact legal classification of cryptocurrency in Singapore, there is now a legal framework for cryptocurrency trading.
    • In the U.S., the open approach taken by the authorities has resulted in the trade in cryptocurrency being both taxed and appropriately regulated.

    India’s approach

    • Between 2013 and 2018, the government’s response to the rise of virtual currencies was cautionary, alerting users to the potential risks posed by cryptocurrency transactions.
    • Instead of developing a regulatory framework to address these issues, the Reserve Bank of India (RBI), in April 2018, effectively imposed a ban on cryptocurrency trading.
    • This ban was overturned by the Supreme Court in 2020.
    • The court reasoned that there were alternative regulatory measures short of an outright ban through which the RBI could have achieved its objective of curbing the risks associated with cryptocurrency trading.
    • India’s next move lies in the draft Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
    • The draft Bill proposes to criminalise all private cryptocurrencies while also laying down the regulatory framework for an RBI-backed digital currency. 

    What should be India’s approach?

    • The global regulatory attitude towards cryptocurrencies offers valuable insights into the alternative ways to achieve balanced regulation.
    •  In India, the absence of an existing legal classification of cryptocurrency should not be the impetus to prohibit its use.
    • The government should use this as an opportunity to allow private individuals the freedom to harness a powerful new technology with appropriate regulatory standards.

    Consider the question “As India finds itself at a crossroads of prohibition and regulation in its tryst with cryptocurrencies, globally, the inclination towards permissive regulation recognises the freedom of choice given to people. In light of this, examine the advantages and concerns with the cryptocurrencies and suggest the approach India should adopt towards the cryptocurrencies.”

    Conclusion

    Regulations to avoid the pitfall and not the outright ban is the right way towards the cryptocurrencies.

  • Kerala’s Silver-Line Railway Project

    Last week, the Kerala cabinet gave the green light to begin acquiring land for SilverLine, its flagship semi high-speed railway project.

    What is the SilverLine project?

    • The SilverLine Project entails building a semi high-speed railway corridor through the state linking its southern end and state capital Thiruvananthapuram with its northern end of Kasaragod.
    • It is billed as one of the biggest infrastructure enterprises being pushed by the ruling Left government.
    • The line is proposed to be 529.45 km long, covering 11 districts through 11 stations.
    • When the project is realized, one can travel from Kasaragod to Thiruvananthapuram in less than four hours on trains traveling at 200 km/hr.
    • The current travel time on the existing Indian Railways network is 12 hours.
    • The project is executed by the Kerala Rail Development Corporation Limited (KRDCL), a joint venture between the Kerala government and the Union Ministry of Railways.

    What was the need for the project?

    • It has long been argued by urban policy experts that the existing railway infrastructure in the state cannot meet the demands of the future.
    • Most trains run with an average speed of 45 km/hr due to a lot of curves and bends on the existing stretch.
    • The government claims the SilverLine project is the need of the hour as it can take a significant load of traffic off the existing railway stretch and make travel easier and faster for commuters.
    • This will in turn reduce the congestion on roads and help reduce accidents and fatalities.

    Issues with the Project

    • The unofficial deadline for the project is 2025 but many would say it’s not a realistic target, given the laborious nature of land acquisition in a highly densely populated state like Kerala.
    • Acquiring land, especially from private players, in urban areas remains the key challenge for the project.
    • There’s also significant opposition to the project by environmentalists citing potential damage to the state’s ecosystem in the path of the proposed route.
    • They fear irreversible impact to the state’s rivers, paddy fields, and wetlands, triggering floods and landslides in the future.

  • FSSAI recognizes new precision Iodine Value Analyser

    The Council of Scientific and Industrial Research-Central Scientific Instruments Organization (CSIR-CSIO) has developed and transferred the technology of Precision Iodine Value Analyzer (PIVA).

    What is Precision Iodine Value Analyzer?

    • It is an instrument for the measurement of the degree of unsaturation (iodine value) in vegetable oils.
    • This indigenous food testing equipment was recognized by the Food Safety and Standards Authority of India (FSSAI) on World Food Safety Day on June 7, 2021.
    • It has applications in oil extraction units, quality control and assurance labs, food regulatory authorities, soaps and cosmetics, bakeries, meat industry, paint industry, biodiesel analysis, and charcoal industry.
    • It is also useful in determining adulteration in edible oils and fats.

    Measuring iodine value

    • Iodine value is conventionally determined using manual titration and a few analytical instruments based on automated titration.
    • However, these methods take a longer time to analyze, are costly, and use toxic chemicals.
    • Researchers at CSIR-CSIO developed a rapid analysis technique that takes just three minutes to carry out the same analysis.
    • Currently, PIVA has been calibrated and tested for coconut, sunflower, mustard, palm, rice bran, soybean, groundnut, olive oil, and ghee.
    • This new development is a part of the ongoing effort to strengthen the food testing capabilities by introducing quick and advanced food testing kits.

  • [pib] NAFED launches Fortified Rice Bran Oil

    The Department of Food and Public Distribution today E-launched “NAFED Fortified Rice Bran Oil”.

    Rice Bran Oil

    • Rice bran oil is the oil extracted from the hard outer brown layer of rice called chaff (rice husk).
    • It is known for its high smoke point of 232 °C (450 °F) and mild flavor, making it suitable for high-temperature cooking methods such as stir-frying and deep-frying.
    • It is popular as a cooking oil in the Indian subcontinent.
    • It has a composition similar to that of peanut oil, with 38% monounsaturated, 37% polyunsaturated, and 25% saturated fatty acids.
    • It is generally safe for consumption for most people when used in moderate amounts. However excessive usage of rice bran oil can lead to stomach discomfort.

    What is NAFED oil?

    • Rice Bran oil from NAFED will be fortified and it will be ensured that it will contain additional nutrients and vitamins.
    • This Rice bran oil will be marketed by NAFED (National Agricultural Cooperative Marketing Federation of India Ltd).
    • According to the FSSAI, fortified oil can help a person fulfill 25-30% of the recommended dietary intake for vitamins A and D.
    • NAFED Fortified Rice Bran Oil will be available at all NAFED Stores and also on various online platforms.

    Benefits of the NAFED oil

    • This initiative will significantly reduce the country’s consumption dependence on imported edible oil in the future.
    • This will provide opportunities for Indian edible oil manufacturers further, and also will give an impetus to the Aatmnirbhar Bharat initiative.
    • It will provide easy access to NAFED branded high-quality rice bran oil, which will also give a boost to the indigenous oil manufacturing industry.

    Health benefits of rice bran oil

    • Rice Bran oil has multiple health benefits, including lowering cholesterol levels due to its low trans-fat content and high monounsaturated and polyunsaturated fat contents.
    • It also acts as a booster and reduces the risk of cancer due to the high amount of Vitamin E it contains.
    • This oil is recommended by The American Heart Association and the World Health Organization (WHO) as one of the best substitutes for other edible oils.

    About NAFED

    • NAFED is an apex organization under the Ministry of Agriculture that deals with marketing cooperatives for agricultural produce in India.
    • It is registered under the Multi-State Co-operative Societies Act.
    • It was set up with the object to promote Cooperative marketing of agricultural produce to benefit the farmers.
    • Agricultural farmers are the main members of NAFED, who have the authority to say in the form of members of the General Body in the working of NAFED.

  • New Shephard rocket system for cost-effective access to space

    Last week, Amazon founder and billionaire Jeff Bezos’s space company called Blue Origin concluded the online auction for the first seat on New Shephard, a rocket system meant to take tourists to space.

    What is New Shephard?

    • New Shephard has been named after astronaut Alan Shephard – the first American to go to space – and offers flights to space over 100 km above the Earth and accommodation for payloads.
    • Essentially, it is a rocket system that has been designed to take astronauts and research payloads past the Karman line – the internationally recognized boundary of space.
    • The idea is to provide easier and more cost-effective access to space meant for purposes such as academic research, corporate technology development, and entrepreneurial ventures among others.
    • Apart from its academic and research-oriented goal, New Shephard will also allow space tourists to experience microgravity by taking them 100 km above the Earth.

    Its components

    • The rocket system consists of two parts, the cabin or capsule, and the rocket or the booster.
    • The cabin can accommodate experiments from small Mini Payloads up to 100 kg.
    • As per Blue Origin, the Mini Payloads provide easier space access to students, who are part of educational institutions that are developing their own space programs.
    • Further, the cabin is designed for six people and sits atop a 60 feet tall rocket and separates from it before crossing the Karman line, after which both vehicles fall back to the Earth.
    • All the six seats in the capsule are meant for passengers, each of whom gets their own window seat. The capsule is fully autonomous and does not require a pilot.

    How does it work?

    • The system is a fully reusable, vertical takeoff and vertical landing space vehicle that accelerates for about 2.5 minutes before the engine cuts off.
    • After separating from the booster, the capsule free falls in space, while the booster performs an autonomously controlled vertical landing back to Earth.
    • The capsule, on the other hand, lands back with the help of parachutes.

    A boost for space tourism

    • Space tourism seeks to give laypeople the ability to go to space for recreational, leisure, or business purposes.
    • The idea is to make space more accessible to those individuals who are not astronauts and want to go to space for non-scientific purposes.

  • Synthetic biology and its implications for national security

    Against the backdrop of the Covid-19 pandemic, the article discusses the national security threat emanating from biological weapons.

    Synthetic biology

    • Synthetic biology is a revolutionary technology that can help us manipulate biological organisms and processes for human betterment, especially in treating diseases, by re-engineering cells.
    •  In 2014, the U.S. Department of Defense categorised synthetic biology as one of the six ‘disruptive basic research areas’.
    • Unlike the nuclear domain, the fields of biology or synthetic biology are not regulated internationally despite growing military interest in it.

    Risks involved

    • There is the possibility of deliberate misuse of synthetic biology.
    • There is a need to carefully review, especially in the wake of the pandemic, the biosecurity systems in place where such technologies are in use.
    • Accidental leaks of experimental pathogens are another concern.
    • There has been very little focus on threats emanating from biological sources as compared to the focus on nuclear weapons.
    • This is despite the fact that a well-orchestrated biological attack could have serious implications.
    • This was before synthetic biology came into play.
    • A well-planned attack using highly infectious pathogens synthetically engineered in a lab could be disastrous.
    • It would be difficult to pin responsibility on a specific actor if the incubation period is high,

    BTWC: An inadequate mechanism for regulation

    • Despite being the weapon of mass destruction (WMD) safety and security attention given to bio-weapons is not at par with nuclear and chemical weapons.
    • There is an international convention and an implementing body for both nuclear and chemical weapons.
    • However, for bio-weapons, all we have is the Biological and Toxin Weapons Convention (BTWC) of 1972 with no implementing body.
    • The BTWC does not have a verification clause, nor does it have clearly laid down rules and procedures to guide research in this field.
    • Article 1 of the BTWC bans bio-weapons but research for medical and bio-defence purposes are allowed.
    • While this is understandable, the problem is that there is a thin line between bio-defence research and bio-weapons research. 
    • An Ad Hoc Group set up in 1994 to negotiate a Protocol to enhance the transparency of treaty-relevant biological facilities and activities to help deter violations of the BTWC submitted a report at the Fifth BTWC Review Conference in 2001 but was not accepted by the member states.

    Concerns for India

    • India is at a uniquely disadvantaged position in this area given poor disease surveillance, insufficient coordination among various government departments dealing with biosecurity issues, and the pathetic state of the healthcare system.
    • India has multiple institutions dealing with biosafety and biosecurity threats but there is no coordination among them.
    • Given the rising risk of diseases of zoonotic origin, the traditional ministry-wise separation might not be useful.
    •  India, with its porous borders and ill-trained border control institutions, will remain vulnerable to pathogens or dangerous biological organisms.

    Way forward

    • Pandemics have also highlighted that the traditional distinction at the international institutional level between biological weapons (a field governed by the BTWC) and diseases (governed by BTWC) may not be useful anymore.
    • There needs to be more conversation between health specialists and bio-weapons/defence specialists.
    • The November 2021 BTWC review conference must take stock of the advances in the field, address the thinning line between biotechnology research and bio-weapons research, and consider international measures for monitoring and verification.

    Consider the question “How synthetic biology poses security challenges for India and the rest of the world? Suggest the measures to deal with this challenge.” 

    Conclusion

    Covid-19 should serve as a wake-up call to give BTWC more teeth in dealing with the bio-weapons with a suitable institutional mechanism.

  • Cyberattacks reveal vulnerabilities in critical infrastructures

    The article highlights the threat posed by cyberattacks to our critical infrastructure and suggest the ways to deal with the the ever evolving threat.

    Civilian targets of cyberattacks

    • Several high-profile cyberattacks were reported from the United States during the past several months.
    • These attacks were all primarily on civilian targets, though each one was of critical importance.
    • Obviously cyber, which is often referred to as the fifth domain/dimension of warfare, is now largely being employed against civilian targets.
    • Most nations have been concentrating till date mainly on erecting cyber defences to protect military and strategic targets, but this will now need to change.

    Challenges

    • Defending civilian targets, and more so critical infrastructure, against cyberattacks such as ransomware and phishing is almost certain to stretch the capability and resources of governments across the globe.
    • The distinction between military and civilian targets is increasingly getting erased and the consequences of this could be indeterminate.
    •  In the civilian domain, two key manifestations of the ‘cat and mouse game’ of cyber warfare today, are ransomware and phishing, including spear phishing.
    • Banking and financial services were most prone to ransomware attacks till date, but oil, electricity grids, and lately, health care, have begun to figure prominently.
    • Ransomware attacks have skyrocketed, with demands and payments going into multi-millions of dollars.
    • India figures prominently in this list, being one of the most affected.
    • Compromised ‘health information’ is proving to be a vital commodity for use by cybercriminals.
    • All indications are that cybercriminals are increasingly targeting a nation’s health-care system and trying to gain access to patients’ data.
    • The available data aggravates the risk not only to the individual but also to entire communities.
    • Cybercriminals are becoming more sophisticated, and are now engaged in stealing sensitive data in targeted computers before launching a ransomware attack.
    • Also, today’s cybercriminals, specially those specialising in ransomware and similar attacks, are different from the ordinary  criminals.
    • Many are known to practise ‘reverse engineering’ and employ ‘penetration testers’ to probe high secure networks.

    Way forward

    • The need to be aware of the nature of the cyber threat to their businesses and take adequate precautionary measures, has become extremely vital.
    • Cybersecurity essentially hinges on data protection. 
    • As data becomes the world’s most precious commodity, attacks on data and data systems are bound to intensify.
    • With mobile and cloud computing expanding rapidly cybersecurity professionals are now engaged in building a ‘Zero Trust Based Environment’, viz., zero trust on end point devices, zero trust on identity, and zero trust on the network to protect all sensitive data. 
    • Building deep technology in cyber is essential.
    • New technologies such as artificial intelligence, Machine learning and quantum computing, also present new opportunities.
    • Pressure also needs to be put on officials in the public domain, as also company boards, to carry out regular vulnerability assessments and create necessary awareness of the growing cyber threat.

    Consider the question “Several high-profile cyberattacks across the world have exposed vulnerabilities in the critical infrastructure of even advanced nations. In light of this, examine the challenges posed by cyberattacks and suggest measures to deal with these challenges.” 

    Conclusion

    The threat posed by the cyberattacks highlights the need for improved defences against actual, and potential, cyberattacks by all countries across continents.

  • India’s investment in research unsatisfactory: UNESCO report

    While India has made ‘solid progress’ towards the Sustainable Development Goal (SDG) targets concerning the industry, infrastructure, and innovation, the country’s investment in research remains unsatisfactory, the UNESCO Science Report has observed. UNESCO Science Report.

    This newscard provides useful data about India’s expenditure on R&D and its adequacy.

    UNESCO Science Report

    • The UNESCO Science Report is a global monitoring report published regularly by the United Nations Educational, Scientific and Cultural Organization.
    • Every five years, this report maps the latest trends and developments in national and regional policy landscapes, against the backdrop of shifting socio-economic, geopolitical and environmental realities.

    Data on research funding in India

    • India has one of the lowest GERD/GDP ratios among the BRICS nations, according to the report.
    • The gross domestic expenditure on research (GERD) has been stagnant at 0.7% of the GDP for years, although, in absolute terms, research expenditure has increased.

    Why flag such slowdown?

    • India’s research intensity has been declining since 2014.
    • The Science and Technology Policy of 2003 fixed the threshold of devoting 2% of GDP to research and development (R&D) by 2007.
    • This target date was set back to 2018 in the new Science, Technology and Innovation Policy (2013) then again to 2022 by the Economic Advisory Council of the Prime Minister.
    • In 2020, the task force drafting the country’s new Science and Technology Policy recommended pushing back the target date to a more realistic 2030.

    Rise of private enterprises

    • R&D in the government sector has been in steady decline since 2015, whereas the share of private business enterprises in it has shot up to 42%.
    • While in theory this is a positive trend, the R&D is focused primarily on sectors such as pharmaceuticals, automotive, and information technology.
    • Even in these industries, it is concentrated in a small number of firms, the report said.
    • It further noted that investment in R&D by foreign multinationals is on the rise, accounting for as much as 16% of private-sector investment in R&D in 2019.
    • The report noted that the majority of the software-related patents were being bagged by MNCs operating from Indian soil, while pharma patents were obtained mostly by domestic firms.

    Few successes to count

    • On the bright side is the encouraging increase in scientific publications by Indian researchers on cutting-edge technologies.
    • Total publications have risen from 80,458 in 2011 to 1.61 lakh in 2019.
    • Indian researchers are publishing between 1.5 and 1.8 times the global average on green technologies, complementing the government’s push to expand green energy sources.
    • But then again, patenting by domestic corporations, research institutes, universities, and individuals remain low in India.

    Key suggestions

    • The UNESCO Science Report underscores the need for ‘policy bridges’ for fostering a more effective interaction between foreign and local research firms.
    • Given the large number of multinational corporations now engaged in R&D, it is imperative that the host economy benefits from this activity the report said.
    • It also called for improved linkages between the start-up ecosystem and manufacturers to push technological development in sectors where India enjoys a global presence.

  • Mustard oil blending is now banned

    The Food Safety and Standards Authority of India had decided this on March 31. This would end the practice to add other edible oil (like palms, rice bran, etc) to mustard oil.

    Why such move?

    • This is good news for mustard farmers whose fortunes were adversely hit as up to a fifth of mustard oil volume could earlier be blends of other oils.
    • But why did India start the practice in the first place? And how has it affected consumer health?

    Answer this question from CSP 2018:

    Q.Consider the following statements:

    1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
    2. The Government does not impose any customs duty on all the imported edible oils as a special case.

    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

    Why did the blending begin?

    • The Union health ministry had allowed blending in edible vegetable oil in a notification in 1990.
    • In 1998, Delhi and other north Indian states witnessed the dropsy epidemic — a disease that caused swelling in the body due to the build-up of fluid in tissues.
    • At least 60 people died and 3,000 were hospitalized in the national capital.
    • Researchers believed the consumption of mustard oil caused the disease.

    Adulteration is hazardous

    • Upon investigation, it was found to be adulterated with Argemone Mexicana, a kind of weed that grows with yellow flowers.
    • The adulteration, however, was highly suspicious: While mustard is a rabi crop that is cultivated in the winters, Argemone Mexicana grows in April-May.
    • This meant that the possibility of mixing mustard seeds with that Argemone mexicana was rare.
    • The suspicious adulteration stoked fear among the masses.  It started a campaign against the consumption of oil.
    • Several studies have found mustard oil unsafe for consumption.

    The 1990 decision

    • Experts have claimed that the blending of mustard oil was not only dangerous to health but also adversely impacted mustard farming.
    • Some groups have also flagged the blending of refined oil.
    • Following the Union health ministry’s 1990 notification allowing for the blending of edible vegetable oil, the FSSAI rolled out regulations in the regard in 2006.
    • Producers and other companies involved in blending were regularised through the Agriculture Produce (Grading and Marking) Act (AGMARK).
    • It also made it mandatory to write the kind of oil used for blending over the packet.
    • The companies involved in blending strongly advocated for the cause, despite reports about its excess and unregulated use. The governments over the years have been tight-lipped about it.

    Has blending led to dependence over the import of oil?

    • In 1990-91, India was self-reliant in mustard oil production and produced 98 percent of the oil needed.
    • Blending mustard oil with other edible oils considered to bolster nutritional profile, taste, and quality.
    • Despite the harmful effects, the processing industry took advantage of blending.
    • Cheap palm oil would be blended up to 80 percent in mustard oil sometimes.
    • As a result, profits of mustard farmers dried up, which discouraged them from cultivating the crop.
    • This could be one of the reasons behind India’s increasing dependency on oil imports over the last two decades.