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GS Paper: GS3

  • Pinaka Missile System

    The Ministry of Defence (MoD) has signed contracts with three Indian companies for supply of six regiments of the Pinaka Rocket System to be deployed along borders with Pakistan and China.

    Following things are crucial to know about the Pinaka Missile System:

    1) It’s development and manufacture

    2) Fire Range and other capabilities

    3) Latest technology enhancement

    Pinaka Missile System

    • Pinaka is an indigenously developed rocket system named after Lord Shiva’s mythological bow.
    • It is used for attacking the adversary targets prior to the close-quarter battles which involve smaller range artillery, armoured elements and the infantry.
    • The development of the Pinaka was started by the DRDO in the late 1980s, as an alternative to the multi-barrel rocket launching systems of Russian make, called like the ‘Grad’, which are still in use.
    • After successful tests of Pinaka Mark-1 in late 1990, it was first used in the battlefield during the Kargil War of 1999, quite successfully.
    • Subsequently, multiple regiments of the system came up over the 2000s.

    Its versions and capabilities

    • The Pinaka, which is primarily a multi-barrel rocket system (MBRL) system, can fire a salvo of 12 rockets over a period of 44 seconds.
    • One battery of the Pinaka system consists of six launch vehicles, accompanied by the loader systems, radar and links with network-based systems and a command post.
    • It can neutralize an area one kilometre by one kilometre.
    • The Mark-I version of Pinaka has a range of around 40 kilometres and the Mark-II version can fire up to 75 kilometres.
    • The Mark-II version of the rocket has been modified as a guided missile system by integrating it with the navigation, control and guidance system to improve the end accuracy and increase the range.
    • The navigation system of the missile is linked with the Indian Regional Navigation Satellite System.

  • Exercise Indra 2020

    Amid high operational alert by the Indian Navy in the Indian Ocean Region (IOR) India and Russia are scheduled to hold the bilateral naval exercise, Indra 2020, in the Andaman Sea, close to the strategic Strait of Malacca.

    [Prelims Spotlight]: Various Defence Exercises in News

    https://www.civilsdaily.com/prelims-spotlight-various-defence-exercises-in-news/

    Exercise Indra

    • It is a joint, tri-services exercise between India and Russia
    • This series of exercise began in 2003 and the First joint Tri-Services Exercise was conducted in 2017.
    • Company sized mechanized contingents, fighter and transport aircraft, as well as ships of respective Army, Air Force and Navy, participate in this exercise of ten days duration.

  • Thinking of new recovery path

    Growth and environmental protection are not the polar opposites of each other. The article analyses the issue of balancing the two and using pandemic as an opportunity to evolve novel recovery path.

    Pandemic: opportunity to new recovery path

    • The pandemic presents an opportunity for us to think of a new recovery path, one that can decouple economic growth and environmental degradation.
    • It becomes more important as India sees opportunities on the global call to diversify the supply chain and its internal call for Atmanirbhar Bharat.
    • For that, we need to strengthen our production and manufacturing capabilities.

    Issue of regulatory infrastructure

    • Monitoring and implementing environmental regulations is the biggest challenge we face.
    • Take the municipal solid waste rules.
    • Two decades after the regulations came into effect, their status not in good shape.
    • A comparatively recent regulation, centred around Extended Producer Responsibility, has also posed challenges in monitoring and implementation.
    • In a recent ruling, the judiciary not only ruled against the industry but also blamed officials responsible for implementing the regulations.

    Focus on implementation and monitoring

    •  In the long run, diluting regulatory norms will create more adverse impacts resulting in greater community upsurge.
    • The focus has to be to improve the system’s capabilities to monitor and implement regulatory requirements.
    • There needs to be greater transparency and accountability; there is no dearth of technology to facilitate this.
    • The intention and capacity to take action, rectify and diffuse is critical.
    • The right ecosystem between the industry, community and regulator is crucial.
    • If the three stakeholders remain isolated and get activated only in a crisis, we will not make any progress towards solving the issue.

    Way forward

    • We need to couple growth and environmental protection.
    • Environmental health will be the key enabler of socio-economic growth in the future.
    • Industry needs to realise that it is a part of an ecosystem and not at the centre of it.
    • Communities get impacted, either positively or negatively,  they need to empower themselves through education, so that they are not driven by the agenda of individuals with vested interests.
    • We have a challenge in implementing environmental regulations.
    • The community does not trust that the industry is meeting its compliance requirements, so, the regulatory system’s role is to improve this trust quotient.

    Conclusion

    As we plan our recovery past the pandemic, we have a good chance to create a new normal. We need to align towards a common cause and goals. We should not miss this chance.

  • GST reforms and compensation issue

    The GST compensation issue raises the need for reform in the system. The article discusses this issue and suggests reform.

    Background

    • Three years ago, the Centre and the States of the Union of India struck a grand bargain resulting in GST.
    • The States gave up their right to collect sales tax and sundry taxes, and the Centre gave up excise and services tax. 

    Issue of compensation

    • Consent of the states was secured by a promise of reimbursing any shortfall in tax revenues for a period of five years.
    • This reimbursement was to be funded by a special cess called the GST compensation cess. 
    • The promised reimbursement was to fill the gap for an assured 14% year on year tax growth for five years.

    Why is the Centre denying GST compensation

    • As the economy battles a pandemic and recession, the tax collection has dropped significantly.
    • At the same time, expenditure needs are sharply higher at the State level.
    • Using an equivalent of the Force Majeure clause in commercial contracts, the Centre is abdicating its responsibility of making up for the shortfall in 14% growth in GST revenues to the states.

    Why Central government is wrong in denying the compensation

    •  1) The States do not have recourse to multiple options that the Centre has.[like sovereign bond or a loan against public sector unit shares from the Reserve Bank of India]
    • 2) The Centre can get loans at lower rates of borrowing from the markets as compared to the States.
    • 3) In terms of aggregate public sector borrowing, it does not matter for the debt markets, nor the rating agencies, whether it is the States or the Centre that is increasing their indebtedness.
    • 4) Fighting this recession through increased fiscal stimulus is basically the job of macroeconomic stabilisation, which is the Centre’s domain.
    • 5) Using the alibi of the COVID-19 pandemic causes a serious dent in the trust built up between the Centre and States.
    • It will weaken the foundation of cooperative federalism.

    Reforms needed

    • GST is a destination-based consumption tax, which must include all goods and services with very few exceptions.
    • That widening of the tax base itself will allow us to go back to the original recommendation of a standard rate of 12%, to be fixed for at least a five-year period.
    • Some extra elbow room for the States’ revenue autonomy could be allowed by States non VATable surcharges on a small list of “sin” goods.
    • In the long term there are many changes in consumption patterns, production configurations and locations, which cannot be anticipated and hence a static concept of Revenue Neutral Rate cannot be reference.
    • The commitment to a low and stable rate is a must.
    • We must recognise the increasing importance of the third tier of government. 
    • After 28 years of the 73rd and 74th Amendments, the local governments do not have the promised transfer of funds, functions and functionaries.
    • Of the 12% GST, 10% should be equally shared between the States and the Centre, and 2% must be earmarked exclusively for the urban and rural local bodies.
    • Fresh approach also calls for an overhaul of the interstate GST and the administration of the e-way bill.

    Consider the question “Discuss the issue related to GST compensation to the States by the Central government. Suggest the measures changes in the GST regime to deal with flaws.”

    Conclusion

    GST is a crucial and long-term structural reform which can address the fiscal needs of the future, strike the right and desired balance to achieve co-operative federalism and also lead to enhanced economic growth. The current design and implementation has failed to deliver on that promise. A new grand bargain is needed.

  • What is Carbon-14 (C14) Battery?

    A California-based company has made a self-charging battery, which can run for 28,000 years on a single charge, by trapping carbon-14 (C14) nuclear waste in artificial diamond-case.

    Try this PYQ:

    Q.The known forces of nature can be divided into four classes, viz. gravity, electromagnetism, weak nuclear force and strong nuclear force. With reference to them, which one of the following statements is not correct?

    (a) Gravity is the strongest of the four

    (b) Electromagnetism act only on particles with an electric charge

    (c) Weak nuclear force causes radioactivity

    (d) Strong nuclear force holds protons and neutrons inside the nuclear of an atom.

    What is C14?

    • Carbon-14 (14C), or radiocarbon, is a radioactive isotope of carbon with an atomic nucleus containing 6 protons and 8 neutrons.
    • There are three naturally occurring isotopes of carbon on Earth: carbon-12, which makes up 99% of all carbon on Earth; carbon-13, which makes up 1%; and carbon-14, which occurs in trace amounts.
    • Its presence in organic materials is the basis of the radiocarbon dating method pioneered by Willard Libby and colleagues (1949) to date archaeological, geological and hydrogeological samples.

    C14 battery

    • The battery works by generating electricity on its own from a shower of electrons as a result of radioactive decay scattered and deposited in the artificial diamond-case.
    • The battery can be used in electric vehicles, mobile phones, laptops, tablets, drones, watches, cameras, health monitors and even sensors.
    • It is also said to be extremely safe and tamper-proof as it is coated with a non-radioactive diamond which prevents radiation leaks.

    Best example of nuke waste recycling

    • It is estimated that 33 million cubic metres of global nuclear waste will cost over $100 billion to manage and dispose of.
    • And a lot of this waste is graphite that is one of the higher risks of radioactive waste and one of the most expensive and problematic waste to store.

    Its applications

    • The company says its battery can be used to powerhouses, and that any excess electricity generated can be sold to the grid.
    • As the new battery need not be replaced, it can be installed in hard to reach places like pacemakers and implants, where a regular change of battery is not possible.
    • Another area of use is space electronics. The battery is said to power space equipment in rockets.
    • It can power the electrical needs of space crafts, like providing power to cockpits and assisting launch into the upper atmosphere.

  • Exercise Kavkaz 2020

    India has turned down Russia’s invitation to participate in the multilateral defence exercise Kavkaz 2020.

    Go through the list for once. UPSC may ask a match the pair type question asking exercise name and countries involved.

    https://www.civilsdaily.com/prelims-spotlight-defence-exercises/

    Exercise Kavkaz 2020

    • The Kavkaz 2020 is also referred to as Caucasus-2020.
    • The exercise is aimed at assessing the ability of the armed forces to ensure military security in Russia’s southwest, where serious terrorist threats persist and preparing for the strategic command-staff drills.
    • The main training grounds that will be involved are located in the Southern Military District.
    • The invitation for participation has been extended to at least 18 countries including China, Iran, Pakistan and Turkey apart from other Central Asian Republics part of the SCO.

    Why didn’t India participate?

    • While it is learned that China has confirmed its participation, Pakistan is also likely to send its troops for the exercise.
    • In the response communicated to Russia, New Delhi cited Covid-19 as the official reason to skip ‘Exercise Kavkaz 2020’.
    • The move comes in the backdrop of a border standoff with China in eastern Ladakh.

    Earlier instances

    • Exercise Tsentr last year had the participation of India, Pakistan and all Shanghai Cooperation Organisation (SCO) member-nations.
    • India had participated in SCO peace mission exercise in 2018, and in 2019, for the first time, was involved in a strategic command and staff exercise as part of Exercise Tsentr.

  • Despite the messaging, it is still advantage China

    The article examines whether India has been proving a favourable alternative to China or not.

    Is India becoming alternate supply source and investment destination?

    • Despite media reports and strong messaging from Washington, fewer U.S. companies than predicted might quit China.
    • Companies focused on the Chinese domestic market rather than as a base for exports will likely remain, at least for now.
    • Those that do leave may not choose India as a relocation destination.
    • Many U.S. companies with experience working with China are not convinced that India has China’s established industrial base and expertise.
    • They also see other Asian countries as more competitive.

    India’s strengths

    • Democracy: India’s identity as a democratic “un-China” is one of its strongest selling points.
    • Strong IPR: There is no threat of stealing of intellectual property rights.
    • No coercive tactics: Foreign companies in India are not subject to coercive tactics as in China.
    • Institutions: India’s open and vibrant press, an independent judiciary, and other advantages of democratic governance also provide a contrast to China.
    • Domestic market:India’s well-off domestic market also attracts foreign investors.

    Why China is a favoured destination

    • China offers many advantages, such as a manufacturing infrastructure and skill level that allows innovations to move quickly from prototype to product.
    • China’s specialised industrial zones are massive, collocating companies, factories, logistics, and even research and universities.

    Way forward

    1) Focus on the States

    • India can start by focusing development in those Indian States that have already demonstrated the ability to produce and export in key sectors.
    • Foreign capital could also greatly increase infrastructure funds beyond government spending alone.
    • India might also usefully build up new industrial centres with an eye to geography. [for instance-linking the southeast of the country to supply chains in Southeast Asia]

    2) Focus on the policy framework

    • India should take two great steps-
    • 1) Reduce the number of investments needing approval by the Centre.
    • 2)To increase intra-Ministry coordination on foreign direct investment policies.
    • The same coordination could be extended to the appointment of a high-level official or body in the Prime Minister’s Office.
    • This will ensure that all proposed economic policy changes are consistent with the goal of attracting foreign investment.

    Conclusion

    A policy framework that is transparent, predictable, and provides increased consultations with existing and potential foreign company stakeholders before introducing new Indian economic policies, will play a crucial role in determining India’s foreign investment outlook.

  • Implications of World Bank halting ‘Doing Business’ report for India

    India’s ranking in the World Bank’s ‘Ease of Doing Business’ index has improved spectacularly. However, the World Bank recently halted its publication and announced decision to review and assess data changes for last five years.

    Background

    • Citing irregularities of data for a few countries, the World Bank halted its annual publication ‘Doing Business’ report.
    • It will conduct a systematic review and assessment of data changes that occurred subsequent to the institutional data review process for the last five Doing Business reports.

    Why India should be concerned

    • Through improved ranking India sought to attract investments to achieve the targets set for ‘Make in India’.
    • India’s success in boosting its ease of doing business ranking is spectacular, to 63rd rank in 2019, up from the 142nd position in 2014.
    • Policymakers celebrated it to signal India’s commitment to “minimum government and maximum governance”.
    • The World Bank decision to audit the ‘Doing Business’ report for the last five years may soon cause discomfort by shining a spotlight on the sharp rise in India’s ranking.
    • Study at the Center for Global Development found that the improvement in India’s ranking was almost entirely due to methodological changes.
    • During the same period, however, Chile’s global rank went down sharply, from 34th position in 2014 to 67th in 2017.
    • The contrasting experience of Chile and India casts doubts on not just the country-level data but also the changes in underlying methodologies.

    Does ease of doing business have predictive power?

    • While India’s rank drastically improved, it has meant nothing on the ground.
    • The share of the manufacturing sector has stagnated at around 16-17% of GDP, and 3.5 million jobs were lost between 2011-12 and 2017-18.
    • Annual GDP growth rate in manufacturing fell from 13.1% in 2015-16 to zero in 2019-20, as per the National Accounts Statistics.
    • India’s import dependence on China has shot up.
    • In case of Russia, ease of doing business rank jumped from 120 in 2012 to 20, but without becoming a magnet for investment inflows.
    • China, on the contrary, attracted one of the highest capital inflows but its ease of doing business ranking was low and hovered between 78 and 96 for the years between 2006 and 2017.

    Other flaws in the Index

    • The Indicators used for the index are de jure (as per the statute), not de facto (in reality).
    • The data for computing the index are obtained from larger enterprises in two cities, Mumbai and Delhi, by lawyers, accountants and brokers — not from entrepreneurs.
    • The World Bank’s own internal watchdog, the Independent Evaluation Group, in its 2013 report, has widely questioned the reliability and objectivity of the index.
    • The World Bank conducts a global enterprise survey collecting information from companies.
    • There is no correlation between the rankings obtained from ease of doing business and the enterprise surveys.

    Lack of theoretical basis: Major flaw

    • There is little in any major strand of economic thought which suggests that minimally regulated markets for labour and capital produce superior outcomes in terms of output and employment.
    • Economic history shows rich variations in performance across countries and policy regimes, defying simplistic generalisations.
    • Such simplistic basis is used under a seemingly scientific garb of the quantitative index to the disadvantage of workers.
    • To meet the ease of doing business targets, safety standards of factories are compromised.
    • For instance, in 2016, the Maharashtra government abolished the annual mandatory inspection of steam boilers under the Boilers Act of 1923 and the Indian Boilers Regulation 1950.
    •  However, no factory has complied with self-certification or submitted the third party certification.

    Consider the question “Examine the issues with the World Bank’s ‘Ease of Doing Business Index’?  What are its implications for India?”

    Conclusion

    It is time the World Bank rethinks its institutional investment in producing the ‘Doing Business’ report. India should do some soul searching as to why the much trumpeted rise in global ranking has failed miserably on the ground.

  • In news: Channapatna Toys

    The COVID-19 pandemic has dealt a crippling blow to the Channapatna Toys industry.

    Must read:

    GI Tags in news for 2020 Prelims

    All time GI tags in news

    Channapatna Toys

    • Channapatna toys are a particular form of wooden toys (and dolls) that are manufactured in the town of Channapatna in the Ramanagara district of Karnataka.
    • This traditional craft is protected as a geographical indication (GI) under the World Trade Organization, administered by the state govt.
    • As a result of the popularity of these toys, Channapatna is known as Gombegala Ooru (toy-town) of Karnataka.
    • Traditionally, the work involved lacquering the wood of the Wrightia tinctoria tree, colloquially called Aale mara (ivory-wood).
    • Their manufacture goes back at least 200 years according to most accounts and it has been traced to the era of Hyder Ali and Tipu Sultan in the 18th century.
    • The toys are laced with vegetable dyes and colours devoid of chemicals and hence they are safe for children.

    Back2Basics: Geographical Indications in India

    • A Geographical Indication is used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Such a name conveys an assurance of quality and distinctiveness which is essentially attributable to its origin in that defined geographical locality.
    • This tag is valid for a period of 10 years following which it can be renewed.
    • Recently the Union Minister of Commerce and Industry has launched the logo and tagline for the Geographical Indications (GI) of India.
    • The first product to get a GI tag in India was the Darjeeling tea in 2004.
    • The Geographical Indications of Goods (Registration and Protection) Act, 1999 (GI Act) is a sui generis Act for the protection of GI in India.
    • India, as a member of the WTO enacted the Act to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights
    • GI protection is granted through the TRIPS Agreement.

  • Issue of GST compensation to states

    The article analyses the issue of GST compensation to states under GST regime for five years and how this has turned to be contentious issues after the economic disruption caused by Covid-19.

    The basis for compensation

    • Under Goods and Services Tax (GST) regime the Centre would make good the loss in the first five years if States faced revenue deficits after the GST’s introduction.
    • States sacrificed their constitutionally granted powers of taxation in the national interest.

    GST compensation cess

    • To pay the compensation to states, GST compensation cess was introduced.
    • When the GST compensation cess exceeded the amount that had to be paid to States, the Central government absorbed the surplus.
    •  Now, the economy has slowed down dramatically and the resources raised are insufficient.
    • The Centre is raising questions about whether it is legally accountable to pay compensation.
    • The constitutional framework that ushered in the GST does not provide an escape clause for ‘Acts of God’.

    Way forward

    • As stated by the Secretary of the GST Council in the tenth meeting, the central government could raise resources by other means for compensation and this could then be recouped by continuing the cess beyond five years.
    • Monetary measures are the monopoly of the central government.
    • Even borrowing is more efficient and less expensive if it is undertaken by the Central government.
    • As equal representatives of the citizens State governments expected the Centre to demonstrate empathy and provide them relief through the Consolidated Fund of India.

    Conclusion

    Central government should consider the legal provision in the GST regime and act in the spirit of cooperative federalism.