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[op-ed snap] Technology, globalization and the good jobs challenge

Note4Students

Mains Paper 3: Economic Development| Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

From UPSC perspective, the following things are important:

Prelims level: Nothing as such.

Mains level: The news-card analyses the issue that governments must realize that failure to generate good, middle-class jobs has very high social and political costs, in a brief manner.


Context

  • Around the world today, the central challenge for achieving inclusive economic prosperity is the creation of sufficient numbers of “good jobs”.
  • Without productive and dependable employment for the vast majority of a country’s workforce, economic growth either remains elusive, or its benefits end up concentrated among a tiny minority.
  • The scarcity of good jobs also undermines trust in political elites, adding fuel to the authoritarian, nativist backlash affecting many countries today.

Definition of a good job

  • The definition of a good job depends on a country’s level of economic development.
  • It is typically a stable formal-sector position that comes with core labour protections such as safe working conditions, collective bargaining rights, and regulations against arbitrary dismissal.
  • It enables at least a middle-class lifestyle, by that country’s standards, with enough income for housing, food, transportation, education and other family expenses, as well as some saving.

Need to improve employment conditions

  • There is much that individual enterprises all over the world can do to improve employment conditions.
  • Large firms that treat their employees better—by providing them with higher pay, more autonomy and greater responsibility—often reap benefits in the form of lower turnover, better worker morale and higher productivity.
  • “Good jobs” strategies can be as profitable to firms as they are to workers.

Structural problem: low-skilled labour force

  • But the deeper problem is a structural one that goes beyond what firms can do on their own.
  • Developed and developing countries alike are suffering today from a growing mismatch between the structure of production and the structure of the labour force.
  • Production is becoming increasingly skill-intensive while the bulk of the labour force remains low-skilled.
  • This generates a gap between the types of jobs that are created and the types of workers the country has.

Manufacturing and services are becoming increasingly automated and digitized

  • Technology and globalization have conspired to widen that gap, with manufacturing and services becoming increasingly automated and digitized.
  • While new technologies could have benefited low-skilled workers in principle, in practice technological progress has been largely labour-replacing.
  • In addition, global trade and investment flows, and global value chains in particular, have homogenized production techniques around the world.
  • This has made it very difficult for poorer countries to compete in world markets without adopting skill- and capital-intensive techniques similar to those of the advanced economies.

Intensification of economic dualism

  • Every economy in the world today is divided between an advanced segment, typically globally integrated, employing a minority of the labour force, and a low-productivity segment that absorbs the bulk of the workforce, often at low wages and under poor conditions.
  • The shares of the two segments may differ: developed countries obviously have a greater preponderance of highly productive firms.
  • But, qualitatively, the picture looks quite similar in rich and poor countries—and produces the same patterns of inequality, exclusion and political polarization.

Strategies to reduce the mismatch

There are three ways to reduce the mismatch between the structure of productive sectors and that of the workforce.

  1. Investment in skills and training
  • The first strategy, and the one that receives the bulk of policy attention, is investment in skills and training.
  • If most workers acquire the skills and capabilities required by advanced technologies, dualism would eventually dissipate as high-productivity sectors expand at the expense of the rest.

Implications

  • Such human capital policies are important but even when they are successful, their effects will be felt in the future.
  • They do little to address labour-market realities at present.
  • It is simply not possible to transform the labour force overnight.
  • Besides, there is always the real risk that technology will advance faster than society’s ability to educate its labour-force entrants.

2. Convince successful firms to employ more unskilled workers

  • In countries where the skill gaps are not enormous, governments can nudge their successful firms to increase employment—either directly or through their local suppliers.
  • Governments in developed countries also have a role to play in affecting the nature of technological innovation.
  • Too often, they subsidize labour-replacing, capital-intensive technologies, rather than pushing innovation in socially more beneficial directions, to augment rather than replace less skilled workers.

Implications

  • Such policies are unlikely to make much difference to developing countries.
  • For them, the main obstacle will remain that existing technologies allow insufficient room for factor substitution: using less-skilled labour instead of skilled professionals or physical capital.
  • The demanding quality standards needed to supply global value chains cannot be easily met by replacing machines with manual labour.
  • This is why globally integrated production in even the most labour-abundant countries, such as India or Ethiopia, relies on relatively capital-intensive methods.
  • This leaves a broad range of developing economies—from middle-income countries such as Mexico and South Africa to low-income countries such as Ethiopia—in a conundrum.
  • The standard remedy of improving educational institutions does not yield near-term benefits, while the economy’s most advanced sectors are unable to absorb the excess supply of low-skilled workers.

3. Boosting an intermediate range of labour-intensive, low-skilled economic activities

  • Tourism and non-traditional agriculture are the prime examples of such labour-absorbing sectors.
  • Public employment (in construction and service delivery), long scorned by development experts, is another area that may require attention.
  • But government efforts can go much further.

Implications

  • Such intermediate activities, chiefly non-tradable services carried out by small and medium-size enterprises, will not be among the most productive, which is why they are rarely the focus of industrial or innovation policies.
  • But they may still provide significantly better jobs than the alternatives in the informal sector.

Way Forward

  • Government policy in developed and developing countries alike is too often preoccupied with boosting the most advanced technologies and promoting the most productive firms.
  • But failure to generate good, middle-class jobs has very high social and political costs.
  • Reducing those costs requires a different focus, geared specifically toward the kind of jobs that are aligned with an economy’s prevailing skill composition.
Issues related to Economic growth

[op-ed snap] Nobody speaks to the young

Note4Students

Mains Paper 2: Social Justice| Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

From UPSC perspective, the following things are important:

Prelims level: Nothing as such.

Mains level: The news-card analyses the issues and challenges of youth of our country, in a brief manner.


Context

  • The youth of our country need a sense of purpose and political identity and not sops.

Background

  • Sixty per cent of our country is under the age of 30. Yet, there is little substantive participation of our young in defining the direction of the nation.
  • The average age of our MPs at 56 years is more than double the median age of 25.
  • Statistics are not available for other groups who shape our politics — academics, activists, media — but a quick check of the top names in each area is indicative of similar under-representation of youth.

Issue

  • Talk to young people across the country and what stands out is their feeling of being talked at, pushed around, and dismissed.
  • Consequently, young people respond to rejection with rejection.
  • Ask 10 young people outside of the elite circuit about political developments in the country — most will struggle to respond.
  • Refer to political leaders from various fields and ask the youngsters to talk of their stand on some topical issues. They will shrug.
  • Name the top public intellectuals in the country and most may not even have heard of them.
  • It can be said that young people today are selfish. They are too distracted and lack commitment. But this is, at best, a partial truth.

Youth today is searching for recognition and sense of identity

  • The larger political class and process simply have not been able to establish relevance for young people.
  • Youth, today, are responding to the cues and incentives around them; and paying attention to those who are reaching out to them.
  • Young people are searching for recognition, for an identity in which they can take pride in.
  • Because there are no accessible pathways that can help them get recognised in constructive politics, they are choosing other options.
  • Association with a celebrity, styling themselves like him/her gives that sense of belonging.
  • To be “discovered” in many ways offers a better probability of escaping their circumstances than studying in a dusty college somewhere or working in a dead-end job.
  • Thuggery, bullying, majoritarianism offers a sense of power when as a whole there is a dispiriting lack of agency.

Young India cannot be ignored

  • We cannot ignore Young India if we care about our democracy.
  • Nor can we pick and choose what we want to prioritise — our politics has to be representative of their needs and aspirations.
  • We have to talk about the things that matter to them in a language that they understand.
  • This means prioritising the educational, employment and identity concerns of young people in our daily discourse and politics.

Challenges

(a) Equal educational opportunity

  • Equal educational opportunity has become a purely rhetorical statement.
  • Seventy per cent of our higher education is in the private sector and, increasingly, even public universities are getting privatised with the onset of “self-financing” courses making a complete mockery of the role of education as a tool for socio-economic mobility.
  • Entire universities are completely notional: There are no classes, students study in coaching centers.
  • Three-year courses are taking up to five years to finish.
  • The examination system is a complete sham.
  • Students are paying exorbitant fees and graduates are saddled with debt without job prospects.
  • Yet our focus on these issues is episodic.
  • That too, when there is some immediate crisis, despite the fact that students are the most visible face of a progressing India.

(b) Employment

  • Similarly, our approach to employment is highly utilitarian.
  • Employment is not just about economics, it is also linked to one’s identity.
  • Yet there is very little conversation about how to imbue meaning and pride in the lives of those at the lowest end of the work chain.
  • We want those who work with us to demonstrate “work ethic” — reliability, punctuality, diligence — but it is unclear what exactly is gained for the young person in being all these three things?

Way Forward

  • If we want the vast majority of our young people to imbibe these virtues of collective living, then we need to create those avenues for them where these will be recognised and rewarded.
  • We have to acknowledge the essential role of young people in nation-building and create meaningful opportunities for them to engage with politics and governance.
  • This is important because young people suffer from additional barriers to entry because of their age and inexperience.
  • All of us have a desire for self-expression and to be part of something bigger than ourselves.
  • If those of us who have the power to shape platforms and narratives are unable to make our politics representative of the aspirations of the youth, they will simply look for meaning elsewhere.
Human Development Report by UNDP

[op-ed snap] Surveying India’s unemployment numbers

Note4Students

Mains Paper 3: Economic Development| Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of India’s demographic dividend.

Mains level: The news-card analyses the India’s low labour participation rate and why it fell sharply after demonetisation, in a brief manner.


Context

  • India’s labour participation rate which is very low by world standards, fell sharply after demonetisation.
  • The women were largely at the receiving end and bore the brunt

Background

  • Monthly measurement of the unemployment rate is one of the requirements of the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF).
  • The SDDS was established in 1996 to help countries access the international capital markets by providing adequate economic and financial information publicly.
  • India was one of the early signatories of the SDDS.
  • India complies with many requirements of the SDDS, but it has taken an exception with respect to the measurement of unemployment.

Exception: Govt does not produce any measure of monthly unemployment rate

  • The Government of India does not produce any measure of monthly unemployment rate, nor does it have any plans to do so.
  • Official plans to measure unemployment at an annual and quarterly frequency is in a shambles.
  • This does not befit India’s claims to be the fastest growing economy and as the biggest beneficiary of a famed demographic dividend.

Centre for Monitoring India Economy (CMIE) Survey

  • The Centre for Monitoring India Economy (CMIE), a private enterprise, has demonstrated over the past three years that fast frequency measures of unemployment can be made and that seeking an exception on SDDS compliance is unnecessary.
  • The CMIE decided to fill India’s gap in generating fast frequency measures of household well-being in 2014.
  • In its household survey, called the Consumer Pyramids Household Survey (CPHS), the sample size was 172,365 as compared to that of the official National Sample Survey Organisation (NSSO), which was 101,724.
  • In both surveys, the sample selection method has been broadly the same.

Advantage of CMIE survey over NSSO survey

  • The CPHS is comprehensive, surveying its entire sample every four months where each survey is a wave.
  • The CPHS is also a continuous survey, and so, for example, three waves are completed in a year.
  • The CMIE’s CPHS thus has a much larger sample and is conducted at a much higher frequency than the NSSO’s.
  • Further, the CPHS is conducted as face-to-face interviews necessarily using GPS-enabled smartphones or tablets.
  • Intense validation systems ensure high fidelity of data capture.
  • All validations are conducted in real-time while the teams are in the field.
  • The data capture machinery ensures delivery of high quality data in real time obviating the need for any further “cleaning”, post field operations.
  • Once the data is collected and validated in real-time, it is automatically deployed for estimations without any human intervention.
  • In 2016, the CMIE added questions regarding employment/unemployment to the CPHS.

Difference between the CPHS and the NSSO surveys

  • A difference between the CPHS and the NSSO surveys is the reference period of the employment status of a respondent.
  • While the NSSO tries to capture the status for an entire year and for a week, the CPHS captures the status as on the day of the survey.
  • This could be as one of four factors: employed; unemployed willing to work and actively looking for a job; unemployed willing to work but not actively looking for a job, and unemployed but neither willing nor looking for a job.
  • Since the recall period in the CPHS is of the day of the survey and the classification is elementary, the CPHS has been able to capture the status fairly accurately with no challenges of the respondent’s ability to recall or interpret the status.
  • In contrast, the NSSO’s system is quite complex.

Key findings

  • India’s labour participation rate is very low by world standards and even this low participation rate fell very sharply after demonetisation.
  • The average labour participation rate was 47% during January-October 2016.
  • The world average is about 66%.
  1. Labour participation rate fell after demonetisation
  • Immediately after demonetisation in November 2016, India’s labour participation rate fell to 45%;
  • 2% of the working age population, i.e. about 13 million, moved out of labour markets.
  • That is a lot of people who were willing to work who decided that they did not want to work anymore.

2. Unemployed gave up looking for jobs any further, unemployment rate fell

  • The data show that it was not the employed who lost jobs and decided to stop working.
  • The employed mostly retained their jobs.
  • But it was largely the unemployed who decided that the labour markets had been so badly vitiated after demonetisation that they gave up looking for jobs any further.
  • In short, they lost hope of finding jobs in the aftermath of demonetisation.
  • As more and more unemployed left the labour market, the unemployment rate fell.
  • This is because the unemployment rate is the ratio of the unemployed to the total labour force.
  • This fall gave misleading signals implying that the unemployment rate was falling in a positive sense.
  • In reality it was a reflection of an exodus of the unemployed from the labour markets — a fall in the labour participation rate.

3. India’s female labour participation rate is very low

  • Official statistics have always shown that India’s female labour participation rate is low and falling.
  • The CPHS shows that the situation with respect to women’s participation in the labour force is extremely poor.
  • The entire brunt of demonetisation was borne by women.
  • Their labour participation fell sharply while that of men did not.

Reason for the decline

  • Researchers have shown that this fall is because of rising household incomes that reduce the need for women to join the labour force;
  • increased enrolment in higher education by women which delays their entry into the labour force, and
  • cultural and security factors that keep women away from the labour market in India.
  • Further, it is evident that employers are also biased against hiring women.

4. The Goods and Services Tax shock

  • After the demonetisation jolt came the Goods and Services Tax shock of July 2017 that drove away small enterprises which could not compete in a tax-compliant environment out of business.
  • This caused a substantial loss of jobs.
  • Preliminary estimates suggest that employment shrunk by 11 million in 2018.
  • The brunt of this was again borne largely by women.
  • But men too were also impacted.

Labour participation rate declined

  • Male labour participation rate was 74.5% in 2016.
  • This dropped to 72.4% in 2017 and then to 71.7% in 2018.
  • In contrast, female labour participation was as low as 15.5% in 2016 which dropped to 11.9% in 2017 and then 11% in 2018.
  • Urban female labour participation rates fell faster than rural female participation.
  • In urban India it dropped from 15.2% in 2016 to 10.5% in 2018.
  • The corresponding values for rural women were 15.6% and 11.3%, respectively.
  • Although female labour participation is substantially much lower than male participation, the few women who venture to get employment find it much more difficult to find jobs than men.
  • The unemployment rate for men was 4.9% in 2018 and that for women in the same year was much higher — 14.9%.

Conclusion

  • This higher unemployment rate faced by women in spite of a very low participation rate indicates a bias against employing women.
  • Drawing women into the labour force by removing the impediments they face to at least bring their participation levels close to global standards is critically important for India to gain from the demographic dividend opportunity it has.
  • This window of opportunity is open only till 2030.
  • By not using a good data monitoring machinery, the Indian government is keeping both itself and the citizenry in the dark.
Issues related to Economic growth

Govt. grants divisional status to Ladakh

Note4students

Mains Paper 2: Governance | Development processes

From UPSC perspective, the following things are important:

Prelims level: Ladakh Admin Division

Mains level: Decentralization of administrative control


News

  • Jammu and Kashmir Governor has granted Ladakh a divisional status, thus creating three administrative units of Jammu, Kashmir and Ladakh in the State.

The Ladakh Division

  1. The J&K government has approved the creation of a separate administrative and revenue division for Ladakh.
  2. It will comprise Leh and Kargil districts, with headquarters at Leh.
  3. Earlier, Ladakh was a part of the Kashmir division.
  4. Ladakh will now get its own Divisional Commissioner and Inspector General of Police.
  5. Ladakh’s Kargil and Leh districts already have separate hill development councils for local administrative powers.
  6. The move leaves the Kashmir valley geographically the smallest division at 15,948 sq. km, Jammu division at 26,293 sq. km and Ladakh, the biggest division, at 86,909 sq. km.

Why such move?

  1. The remoteness and inaccessibility of the area makes it eligible for establishing a separate division.
  2. During the winter months, the entire Ladakh region remains cut-off from the rest of the country for almost six months.
  3. A section in Leh also has been demanding Union Territory status.
J&K – The issues around the state

U.S. may end zero-tariffs for India

Note4students

Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: GSP, New FDI norms

Mains level: Read the attached story


News

  • India could lose a vital U.S. trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies.

US sought action: GSP withdrawal

  1. A move to withdraw the Generalized System of Preferences (GSP) from India,
  2. India is the world’s largest beneficiary of a scheme that has been in force since the 1970s.
  3. However the US plans to the strongest punitive action against India, vowing to reduce the U.S. deficit with large economies.

What is GSP?

  1. Generalized System of Preferences (GSP) is a preferential tariff system under which developed nations extend reduced MFN tariffs (Most Favoured Nation) or duty-free entry of certain goods into their markets, to the developing nations.
  2. The developed countries, or the countries that extend this trade preference are called donor countries, and the benefit-receiving countries are called beneficiary countries.
  3. The GSP is an exemption from the MFN principle under which the WTO members are obliged to treat all other WTO members equally as their ‘most favoured’ trading partner-nation.
  4. GSP benefits Indian exporters indirectly through the benefits that are gained by the importers via reduced tariffs and/or duty-free entry.

Bone of Contention: New FDI norms in E-com

  1. The trigger for the latest downturn in trade ties was India’s new rules on e-commerce that restrict the way of famous e-com sites.
  2. The business in a rapidly growing online market set to touch $200 billion by 2027 if not restricted.
  3. India has courted foreign investment as part of his Make-in-India campaign to turn India into a manufacturing hub and deliver jobs to the millions of youth.
  4. Trump, for his part, has pushed for U.S. manufacturing to return home as part of his Make America Great Again campaign.

What are the new norms?

  1. At the heart of the problem is India’s view on the two e-commerce models that exist today: marketplace and inventory.
  2. India allows 100 percent foreign direct investment (FDI) in the marketplace model of e-commerce, which it defines as a tech platform that connects buyers and sellers.
  3. India has not allowed FDI in inventory-driven models of e-commerce.
  4. The inventory model, which Walmart and Amazon use in the United States, is where the goods and services are owned by an e-commerce firm that sells directly to retail customers.
  5. The restriction is aimed largely at protecting India’s vast unorganized retail sector that does not have the clout to purchase at scale and offer big discounts.
  6. It means that Amazon and Flipkart can only operate the marketplace model in India.

Why put restrictions on E-coms?

  1. The e-commerce giants in India have developed complicated seller structures that helped them comply with the inventory control rule while exercising some level of control over inventory.
  2. Traders and small online sellers have accused them of violating the spirit of the law and of using the structures to offer deep discounts, accusations they deny.
  3. The new rules state that the inventory of a seller or vendor will be seen as being controlled by a marketplace if the vendor purchases more than 25 percent of its inventory from the marketplace, or any of its group firms.
  4. The rule would not allow sellers on these giant e-coms to make bulk purchases from the wholesale units of the companies.
Foreign Policy Watch: India-United States

2nd phase of River Information System

Note4students

Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, and Railways etc.

From UPSC perspective, the following things are important:

Prelims level: NW-1, Jal Vikas Marg Project, RIS, Hilsa Fish

Mains level: Enhancing cargo transport with the help of Inland Waterways


News

  • To boost cargo movement on Ganga, Union Transport Minister has inaugurated the second phase of river information system (RIS) between Farakka and Patna.

River Information System (RIS)

  1. RIS is a combination of tracking and meteorological equipment with specialized software designed to optimize traffic and transport processes in inland navigation.
  2. The system enables swift electronic data transfer between mobile vessels and shore (base stations) through advance and real-time exchange of information so as to ensure navigation safety in inland waterways.
  3. It also provides virtual navigational aids to guide the vessel during navigation.
  4. It will help in crisis management and enhanced inland navigation safety by preventing ship-to-ship collisions, ship-bridge collisions, groundings etc.

Implementation of Phase II

  1. The project is aimed at boosting the movement of cargo and fishery development in river Ganga.
  2. Under phase II, five base stations – Manihari, Bhagalpur, Munger, Barh and Hatidah and one control station have been made at Patna.
  3. IWAI is implementing the project in three phases on NW-1.
  4. The inauguration of 2nd phase of RIS will enhance swift electronic data transfer between mobile vessels and base stations on shore through advance and real-time exchange of information.

Other phases of RIS

  1. Earlier, in 2016, the first phase of RIS – 545 km on Haldia- Farakka stretch was commissioned.
  2. Work on third, 356 kms Patna-Varanasi stretch is currently in progress.

Hilsa Fish

  1. Hilsa has a history of migrating to Allahabad in the Ganga river system from Bangladesh.
  2. Though it’s a saltwater fish, it migrates to sweet waters of the Ganges from the Bay of Bengal.
  3. It travels upstream of the river during the mating seasons and returns to its natural abode after spawning.

A passage for Hilsa Fish

  1. Fish pass/Fish way is a structure on or around artificial and natural barriers (such as dams, locks and waterfalls) to facilitate natural fish migration.
  2. Most fishways enable fish to pass around the barriers by swimming into the waters on the other side.
  3. Under Jal Marg Vikas Pariyojana, a fish pass has been envisaged for the free movement of Hilsa at Farakka Navigation Lock.
  4. After the construction of Farakka Navigation Lock in 1976, movement of Hilsa, which once reached up to Prayagraj also, was restricted up to Farakka only.
  5. Based on research and breeding season of Hilsa Fish, the operation of navigational lock will be regulated to facilitate Hilsa movement from Hoogly-Bhagirathi-River system to the upstream in river Ganga and vice-versa.
Inland Waterways

Supreme Court may curb advocates from speaking on cases

Note4students

Mains Paper 3: Polity | Structure, organization and functioning of the Executive and the Judiciary Ministries

From UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level: Various aspects of the contempt of court


News

Contempt Charges for Public Proclamation

  1. The Supreme Court has agreed to examine the possibility of imposing curbs on advocates airing their views in the media about pending cases and the judges handling them.
  2. The apex court was hearing a plea on contempt petitions filed by the government and the Attorney General of India against a famous civil rights lawyer.
  3. The lawyer’s tweets willfully and deliberately” made a false statement in a case pending in court.

Freedom carries with it responsibility

  1. The SC Bench agreed that though the flash of cameras and media attention may seem irresistible to some, a line needed to be firmly drawn.
  2. Observing that “freedom carries with it a responsibility”, it noted that some lawyers even used air time to attack judges, whose code of conduct did not allow them to go public.
  3. The bench also observed that some lawyers rushed to the media as soon as their petition was filed.

Damage to the institution

  1. It can be often sees just after a judgement is pronounced it is publicly proclaimed that it is a black day, bringing disrepute to the institution.
  2. When a matter is sub judice, the lawyers are expected to maintain expected to maintain the decorum of the court and should avoid going public and being part of media and TV debate.
  3. The attack on judicial proceedings in a brazen, willful and malicious manner would tend to shake the very foundation of the justice delivery system.
Judiciary Institutional Issues

Startups to be listed for angel tax exemption

Note4students

Mains Paper 3: Economy | Effects Of Liberalization On The Economy

From the UPSC perspective, the following things are important:

Prelims level: Angel Tax

Mains level: Interventions required by the government to diversify India’s startup’s financing


News

  • The Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) has agreed to compile a list of startups eligible for angel tax exemption, based on their audited financial statements and income tax returns of the previous year.

Why such move?

  1. Angel tax is imposed on the excess share capital raised by an unlisted firm, over and above the fair market value of its shares.
  2. This tax usually impacts startups and the angel investments they attract.
  3. While aimed at curbing money-laundering, the angel tax has also resulted in a large number of genuine startups receiving notices from the IT Department.

Criteria for Exemption

  1. The government has decided to raise the maximum time limit below which a firm would be deemed eligible for angel tax exemption to 10 years from the earlier seven.
  2. Further, the paid-up share capital threshold below which startups would be eligible for an exemption has been set at ₹25 crore.
  3. In cases where the investment exceeds ₹25 crore, the firms would be eligible for exemption if the angel investors can prove a net worth of ₹2 crore or more in the previous financial year.
  4. For investments below ₹25 crore, no questions would be asked.

Documentation

  1. Startups would have to furnish three types of documents in order to be registered with the government:
  • Audited financials for the previous year,
  • IT returns for the previous year, and
  • A self-certified declaration.
  1. The declaration is to certify that the firm does not have ownership or investments nor plans to deploy the angel investment in real estate holdings of any kind and assets, including premium cars of value above ₹10 lakh, gold and art, diamonds, precious metals or jewellery etc.
  2. The declaration has to also acknowledge that if the company possesses any of these items, then the exemption granted from Section 56(2)(viib) would be revoked with retrospective effect.
Tax Reforms

[pib] Exercise Cutlass Express 2019

Note4students

Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: Exercise Cutlass Express 2019

Mains level:  India-US strategic relations


News

  • INS Trikand, a front-line warship of the Indian Navy, recently participated in a multinational training exercise ‘CUTLASS EXPRESS – 19’ held from 27 Jan to 06 Feb 19.

Exercise Cutlass Express 2019                                       

  1. Cutlass Express 2019 is sponsored by U.S. Africa Command (AFRICOM) and is conducted by U.S. Naval Forces Africa.
  2. It is an exercise designed to assess and improve combined maritime law enforcement capacity, promote national and regional security in East Africa as well as information sharing, planning and operating.
  3. The aim of the exercise was to improve law enforcement capacity, promote regional security and progress inter-operability between the armed forces of the participating nations.
  4. During the exercise, Naval, Coast Guard and Marine Police personnel from a number of East African countries were jointly trained by mentors from USA, India, and Netherlands, with support of international organisations.

Role of Indian Navy

  1. The Indian Navy played a significant role in the exercise, being involved in planning, coordination and execution.
  2. Through INS Trikand, the IN provided a platform for live Visit Board Search Seizure (VBSS) drills, which proved to be of immense training value to the participating nations.

About INS Trikand 

  1. INS Trikand is equipped with a versatile range of sensors and weapons enabling her to address threats in all the three dimensions – air, surface and sub-surface.
  2. It is an ideal platform for prolonged deployments, including the present one, in which she is carrying out Presence and Surveillance missions and Anti-piracy operations in the Gulf of Aden and Western Arabian Sea.
  3. The ship is a part of the Indian Navy’s Western Fleet and operates under the Flag Officer Commanding-in-Chief, Western Naval Command, headquartered at Mumbai.
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