March 2019
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[op-ed snap]New era of transparency in tax

News

Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level:  Tax Code

Mains level: Tehnology reforms in Taxation System

CONTEXT

Technology has transformed the face of tax administration in India, benefiting taxpayers and authorities alike. Electronic interface replacing manual transactions over the years has not only enhanced the taxpayer experience and the efficiency of tax authorities tremendously, but has also heralded a new era of tax transparency.

Reforms Undertaken for Tax Transparency

  • Electronic interface replacing manual transactions over the years has not only enhanced the taxpayer experience and the efficiency of tax authorities tremendously, but has also heralded a new era of tax transparency.
  • Even adoption of technology by corporates in their tax functions has been catalysed by the use of technology by the tax department.
  • The finance minister’s announcement in the Budget speech is a clear indication of the recognition of the importance of technology in tax functions and the confidence of the department in its ability to achieve its goals by using technology.

Adoption of technology by Income Tax Department

  • That the Income Tax Department has been at the forefront in adopting technology is not an overstatement.
  • The department is the torchbearer in digital adoption (even ahead of the private sector at times). Initiatives taken in the last decade to leverage technology are testimony to this—be it the Centralised Processing Centre (CPC) in Bangalore for processing I-T returns in an automated, rule-based manner, or the TDS CPC, a transformational initiative undertaken by the department for TDS administration. Initiatives for e-filing of income tax round the clock and providing single-window access to income tax-related services for citizens and other stakeholders have revolutionised the landscape.
  • Adoption of technology has been backed by process re-engineering, and has helped the department create a foundation for administering a fast-growing tax base, with an ever-increasing focus on taxpayers’ experience and voluntary compliance.

Major Technological Initiative

  • The finance minister spoke about two major initiatives.
  • These encompass processing of returns within 24 hours, with refunds issued simultaneously, and the department’s shift towards a regime where all verification and assessment of returns will be done electronically, in an anonymous manner, without there being any physical interface between taxpayers and tax officers.
  • The first project announced is the `4,241.97 crore Integrated E-filing and Centralised Processing Centre 2.0 Project, which was approved by the Cabinet on January 17, 2019.
  • This next-generation income-tax e-filing system will cut down the processing time for returns to less than 24 hours and credit refunds to taxpayers’ bank accounts expeditiously.

Benefits

  • This means the turnaround time for processing of returns will be reduced to hours.
  • The system will also help enhance taxpayers’ awareness and knowledge through continuous engagement, and help improve tax compliance while ensuring transparency and accountability.
  • In line with digital transformation under Digital India, the new solution aims to revamp taxpayers’ experience, and at the same time promote voluntary tax compliance and reduce tax arrears.

Income Tax E-Assessment Scheme

  • This initiative seeks to ensure that “no person will be required to appear personally or through an authorised representative before a designated authority (of the I-T Department) in connection with any proceedings,” which implies jurisdiction-less and faceless service delivery.
  • Minimising physical touchpoints will certainly be a transformational change aimed at bringing in transparency in the system. E-assessment will be further strengthened by the intelligence generated through the Project Insight of the I-T Department.

Way Forward

  • Technology-driven innovation is key to achieve the tax policy’s objective of a wider tax base, resulting in moderate rates.
  •  Newer technology propositions are being adopted by the tax department and businesses, and it seems that in the not-too-distant future all tax-worthy people would hold their heads high by paying desired taxes and no one would face challenge of unreasonable tax assertion.
  • Emerging technology-driven initiatives will bring in new synergies between the tax department and taxpayers, and transform the way income tax is administered in India.

 

 

 

 

[op-ed snap]Consumption is the key, not easy to stimulate either govt or private spending

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: GDP.

Mains level: The news-card analyses the recent slowing down of growth and how to revive it.


NEWS

CONTEXT

It won’t be easy to stimulate either govt or private spending.Indeed, even if RBI trims the repo rate by 50 basis points, it won’t have much of an effect since the liquidity in the banking system will probably stay in a deficit with the currency in circulation remaining elevated.

Background

  • As anticipated, much of the slowdown in the economy during Q3FY19—growth came in at just 6.6% year-on-year (y-o-y)—was due to slower government consumption and, to a lesser extent, moderating private consumption.
  • Even this is hard to comprehend given the festive season was one of the dullest ever, resulting in weak sales of durables such as cars.

Distressed Financial Conditions

  • Tighter financial conditions since September 2018, after the crisis in the Non-Banking Financial Companies (NBFC) space, have choked off the flow of credit to consumers.
  • Liquidity will remain tight given the relatively slow growth of deposits, making loans costlier for consumers.
  • Again, much of the consumer credit has been in the form of unsecured loans, and banks will be forced to cut back on these.
  • At least 30% of the sales of consumer durables and staples now emanates from rural India, so these will be impacted by the relatively weak purchasing power in the hinterland.
  • Also, slowing global growth will exacerbate the cyclical slowdown, not just hitting exports but also singeing both manufacturing and investments.
  • That, then, will keep consumption subdued because very few new job opportunities will be created.

Current Efforts to revive Growth

  •  The large amounts of FDI flowing into the e-commerce sector are resulting in jobs—both for the skilled and unskilled.
  •  But that is not enough to keep consumption growth at the current pace. Given much of the local investments are being channeled into buying stressed assets—either via the IBC route or otherwise—no new jobs are being created.
  • Thus, even the limited investments won’t sustain since promoters don’t have unlimited resources, are fairly leveraged and are unlikely to take big bets until the elections are over.
  • Indeed, even if RBI trims the repo rate by 50 basis points, it won’t have much of an effect since the liquidity in the banking system will probably stay in a deficit with the currency in circulation remaining elevated.

Conclusion

  • To be sure, there will some election-related spending on automobiles and other items, but that will taper off in a few months.
  • Unfortunately, government spending which has been holding up consumption in the last couple of years will remain muted since tax revenues have fallen way short of targets.
  • The relatively poor GST collections threaten to crimp government expenditure in 2019-20, too. Also, off-budgetary spends have been uncomfortably high and could be curtailed further, and that will lower spends.

 

 

 

Economic Indicators-GDP, FD,etc

[op-ed snap]Unmet farm challenge

Note4students

Mains Paper 3: Economic Development| Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers

From UPSC perspective, the following things are important:

Prelims level: Nothing as such.

Mains level: The news-card analyses decline in farm incomes and policy failure in reviving growth.


NEWS

CONTEXT

Policy still hasn’t adjusted itself to address the crisis of agricultural produce deflation.

Background

  • India’s agricultural output grew by hardly 2.7 per cent during the last October-December quarter.
  • That isn’t bad, if one takes the corresponding year-on-year increases for the preceding 10 quarters; these have ranged between 4.2 per cent and 7.5 per cent.

Reason for concerns

  •  The cause for concern is that these reasonably good production growth rates in “real” terms haven’t translated into higher farm incomes, which are a product of output multiplied by current prices.
  • According to the Central Statistics Office, the annual growth in “nominal” gross value added (GVA) from agriculture at current prices for October-December was 2.04 per cent.
  • Worse, we now have seven consecutive quarters of single-digit nominal growth rates — the target of doubling farmers’ income in five years requires an annual increase of 14.4 per cent.

Agriculture and deflation

  • The above data is reflective of a phenomenon rarely seen in India: Agricultural produce deflation.
  • That this isn’t a one-off thing is established by consumer food price inflation, too, ruling below overall retail inflation now for 29 consecutive months since September 2016.

Implications of deflation

  •  The implications are not just economic — low food prices, among other things, have allowed the RBI to soften its monetary policy stance and cut interest rates — but also political.
  • If farmers find incomes not rising or even falling despite bumper harvests, they are bound to vent their anger.
  • Managing agrarian unrest has, indeed, been the single biggest challenge for the government, especially after prices of the rabi crop planted after demonetisation crashed at the time of market arrivals in April-June 2017.
  • Prices haven’t looked up since.

Need for review

  • If prices aren’t rising because of a general economic slowdown and stagnant incomes — particularly among lower-decile households, whose elasticity of demand for food is the highest — this might be more episodic than structural. But even if that is so, agricultural policy needs a fundamental review.
  • The supply response of Indian farmers — their ability to increase production when prices go up — has improved significantly over the past two decades.
  • It has rendered the old approach of looking at the sector through the prism of shortages redundant.

Way Forward

  • Shortages are better left to be managed by market forces than imposing stockholding limits and export restrictions. Farmers suffer when their produce prices are low.
  • The next government, irrespective of the party heading it, should ensure that they aren’t denied the opportunity to make money when prices shoot up.
Agricultural Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] National Common Mobility Card

Note4students

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

From UPSC perspective, the following things are important:

Prelims level: NCMC

Mains level: Utility of the NCMC


News

  • In order to ensure a seamless travel across metros and other transport systems in addition to retail shopping and purchases, the MoHUA came out with the National Common Mobility Card (NCMC) Program.

Background

  • Public Transport is extensively used across India as the economical and convenient mode of commuting for all classes of society.
  • Cash continues to be the most preferred mode of fare payments across the public transport.
  • However, there are multiple challenges associated with the cash payment e.g. cash handling, revenue leakages, cash reconciliation etc.
  • The introduction of closed loop cards issued by these operators helped to digitize the fare collection to a significant extent.

National Common Mobility Card

  1. Ministry of Housing & Urban Affairs brought to the fore the NCMC to enable seamless travel by different metros and other transport systems across the country besides retail shopping and purchases.
  2. India’s First Indigenously Developed Payment Eco-system for transport consists of:
  • NCMC Card
  • SWEEKAR (Swachalit Kiraya: Automatic Fare Collection System)
  • SWAGAT (Swachalit Gate)
  1. These are bank issued cards on Debit/Credit/Prepaid card product platform.
  2. The customer may use this single card for payments across all segments including metro, bus, suburban railways, toll, parking, smart city and retail.
  3. The stored value on card supports offline transaction across all travel needs with minimal financial risk to involved stakeholders.
  4. The service area feature of this card supports operator specific applications e.g. monthly passes, season tickets etc.

Agencies Involved

  1. CDAC was entrusted the task of finalization of NCMC specification for AFC system including the interface with Bank server.
  2. CDAC worked in collaboration with NPCI to complete this activity. Thereafter, BEL was roped in for making Gates & Reader.
  3. NCMC Ecosystem offers the value proposition for customers as they need not to carry multiple cards for different usage.

About Automatic Fare Collection System

  • AFC System (gates, readers/validators, backend infrastructure etc.) is the core of any transit operator to automate the fare collection process.
  • The major challenge associated with AFC system implementation in India till now is the lack of indigenous solution provider.
  • Till now, AFC systems deployed at various Metros are from foreign players.
  • In order to avoid the vendor lock-in and create an interoperable system, there was a need to develop indigenous standards and AFC system under Make in India initiative.
Digital India Initiatives

[pib] BOLD–QIT Project

Note4students

Mains Paper 3: Internal Security | Security challenges & their management in border areas

From UPSC perspective, the following things are important:

Prelims level: BOLD-QIT  Project

Mains level: Ensuring border security


News

  • The MHA has inaugurated the project BOLD-QIT (Border Electronically Dominated QRT Interception Technique) under CIBMS (Comprehensive Integrated Border Management system) on India-Bangladesh border in Dhubri District of Assam.

Border Electronically Dominated QRT Interception Technique

  • BOLD-QIT is the project to install technical systems under the Comprehensive Integrated Border Management System (CIBMS), which enables BSF to equip Indo-Bangla borders with different kind of sensors in unfenced riverine area of Brahmaputra and its tributaries.
  • In Jan, 2018, IT Wing of BSF undertook the project BOLD-QIT.
  • The entire span of River Brahmaputra has been covered with data network generated by Microwave communication, OFC Cables, DMR Communication, day and night surveillance Cameras and intrusion detection system.
  • These modern gadgets provide feeds to BSF Control Rooms on the Border and enable BSF Quick Reaction Teams to thwart any possibility of Illegal Cross Border Crossing/ Crimes.
  • The implementation of this project will not only help BSF to curb all type of cross border crimes but also provide respite to the troops from round the clock human surveillance.

Why this move?

  • Border Security Force is responsible for safeguarding of 4,096 Km long International Border with Bangladesh.
  • At various places, it is not possible to erect Border Fence due to the geographical barriers.
  • The 61 Km of Border area where River Brahmaputra enters into Bangladesh is consisting of vast char lands and innumerable river channels thus making border guarding in this area, a daunting task especially during rainy season.
Foreign Policy Watch: Cross-Border Terrorism

[pib] Indo-Pacific Regional Dialogue – 2019

Note4students

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

From the UPSC perspective, the following things are important:

Prelims level: IPRD

Mains level: Geo-political importance of Indo-pacific region


News

  • The second edition of Indo-Pacific Regional Dialogue (IPRD) – 2019 was recently held in New Delhi.

 Indo-Pacific Regional Dialogue (IPRD)

  1. The idea of an IPRD was first conceptualized and conducted in 2018, as the apex level conference of the Indian Navy, organised by the National Maritime Foundation as the Navy’s Knowledge Partner.
  2. The annual dialogue aim to provide:
  • a platform for substantive and insightful discussions pertaining to the geopolitical developments affecting the maritime domain of the Indo-Pacific
  • policy-relevant inputs to the policy-makers and the public at large

Focus areas

  • Practical solutions for achieving cohesion in the region through maritime connectivity
  • Measures to attain and maintain a free-and-open Indo-Pacific
  • A regional approach to the region’s transition from a ‘Brown’ to a ‘Blue’ economy
  • Opportunities and challenges arising from the maritime impact of ‘Industry 4.0’ and
  • How the twin conceptualizations of ‘SAGAR’ and ‘SAGARMALA’ might best be made mutually-reinforcing on a regional level
Indian Ocean Power Competition

Red Sanders is now free of export restrictions

Note4students

Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: Red Sanders and its uses

Mains level: Issue over trade of endangered species


News

  • All red sanders farmers, who were not allowed to export their produce as the foreign trade policy prohibited it, now can.
  • The Directorate General of Foreign Trade (DGFT), an agency of the Ministry of Commerce and Industry has revised its export policy to permit its export if it is obtained from cultivated land.

Why this move?

  • Ironically, the Indian government had itself asked for quotas to export red sanders from CITES as the tree is categorised as a species that needs protection.
  • Estimates suggest that there are more than 3,000 farmers across India who were unable to sell their produce due to the earlier export policy.
  • Earlier, only seized logs from smugglers were being exported depending on state government rules.
  • However, red sanders remains listed in the Appendix II of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora).

Red Sanders and its uses

  • Red sanders (Pterocarpus santalinus), known for its rich hue and therapeutic properties, is high in demand across Asia, particularly in China and Japan.
  • It is used in cosmetics and medicinal products as well as for making furniture, woodcraft and musical instruments.
  • Its popularity can be gauged from the fact that a tonne of red sanders costs anything between Rs 50 lakh to Rs 1 crore in the international market.

Why restrictions?

  • The tree is endemic to several districts in Andhra Pradesh and some parts of Tamil Nadu and Karnataka.
  • But over-exploitation prompted the Union government in the 1980s to recommend inclusion of red sanders in Appendix II of CITES.
  • The Appendix II says that trade must be controlled in order to avoid utilization incompatible with their survival.
  • The species was listed in Appendix II of CITES in 1995, and subsequently export of red sanders was prohibited in 2004.

Lifting restrictions

  • In 2010, when the CITES was planning to suspend trade of red sanders obtained from India, the government submitted a Non-Detriment Finding (NDF) report saying it must be allowed to export from cultivated sources.
  • So in 2012, India got an export quota on red sanders from CITES, under which the country could export 310 tonnes of red sanders obtained from “artificially propagated” sources and 11,806 tonnes of wood from seized sources.

Boosting Farmers

  • Though a farmer can grow the tree, he/she requires permits to fell and transport the wood, which was difficult to obtain.
  • Moreover, the price of this wood in the domestic market is less than half of what it is in the international market as the demand is low.
  • At the same time, the farmer could not even export it earlier as the foreign trade policy prohibited it.

What else can be done?

  • The GoI should also create a separate Timber Development Board under the Ministry of Agriculture and Farmers’ Welfare as a single-window system for all farming activities to facilitate export process.
Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

Mainamati Maitree Exercise 2019

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Exercise Mainamati Maitree

Mains level:  Not Much


News

  • Border Security Force (BSF) and Border Guards Bangladesh (BGB) has concluded a three-day ‘Mainamati Maitree Exercise 2019’ as a part of ‘Confidence Building Measures’ between the two border guards.

Mainamati Maitree Exercise 2019

  • The exercise was named after a hill range situated 8 km west of Comilla Township in Bangladesh, which is home to an ancient Buddhist archaeological site in the region.
  • The main objective of this exercise was to plan and conduct anti-smuggling and anti-criminal activity related operations with ultimate aim of achieving better joint operational efficiency and border management in the area.
  • A series of joint exercises and exchanges are being held in the Tripura-Bangla frontier illegal incursions by Rohingya people.
Foreign Policy Watch: India-Bangladesh