[op-ed snap] Capital gains

Mains Paper 3 : issues relating to planning, mobilization of resources |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : OECD

Mains level : Need to bring taxation reforms in face of new challenges


CONTEXT

India’s tax authority is now considering a revamp of the rules for taxing multinational companies as well as digital firms, with a committee of the Central Board of Direct Taxes recommending changes to protect the country’s revenue interests.

Reasons

1. Tax Avoidance – At the core of this move is the issue of taxation rights on income generated by global firms operating across various jurisdictions in an age of digitalisation and profit shifting or tax avoidance strategies marked by exploiting loopholes to transfer profits to low tax destinations.

2. Rise of gig Economy – The rise of the digital and the gig economy in particular, has made the concept of a physical presence as a threshold for taxation redundant, posing challenges to governments and fiscal experts.

3. Recommendations of International groups – The OECD (Organisation for Economic Co-operation and Development)/ G-20 Base Erosion and Profit Sharing Project recognises this situation and envisages a global consensus on tax rules by 2020.

It has now forced governments to consider fundamental changes to taxation rules to ensure that tax revenues are not eroded.

Focus Areas of OECD Model

1. A new approach on profit attribution –  Indian authorities, like some of their peers globally, will now have to firm up their approach on profit attribution — the allocation of profits between jurisdictions where customers are located and where factors of production are located and where supply side activities are carried out.

2. Conflict regarding taxation rights

  • The OECD model tax convention favours granting taxation rights to the country of residence of the taxpayer, an approach which India and some other countries do not agree with.
  • Rather, they argue taxation rights should be allowed in jurisdictions where value is created and which contributes to demand by economic activity.

3. Allocation based on variables – The other proposal which is now being considered is a formula for allocation of such taxes among countries based on sales, payroll or wages besides assets and property.

Problems with the OECD Model

1. Discriminatory Taxation – Indian authorities have argued rightly that adopting the OECD model will mean not just losing revenues but also taxing local firms, putting them at a disadvantage compared to their foreign firms, with an adverse impact on competitiveness, demand, revenues and profits.

2.Need for predictability and stability – For a country like India, which needs greater inflow of capital to boost growth and create more jobs, what will count more is not the new formula or rules for taxing cross-broader activities, but the stability and predictability of its tax regime. That’s what foreign investors fret about.

Tax Reforms

[op-ed snap] A bad deal

Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : LoC

Mains level : Suspending trade across Loc mightnot prove to be a good idea.


CONTEXT

Suspension of LoC trade is a poorly-thought move that shrinks the space for manoeuvre in Kashmir and with Pakistan.

Importance of trade

1.Confidence building In Kashmir – That it was launched at all, and survived the deep freeze of India-Pakistan ties that followed 26/11, growing in value and symbolic importance to Kashmiris on either side of the LoC over the next decade, was due to the all around acknowledgment that Kashmir needs special specific confidence-building measures, and that these need to be kept separate from the India-Pakistan relationship.

2.Symbolic Value – Cross LoC interaction carried huge symbolic value in Kashmir, even though the trade itself has been far below its actual potential, and was tied up with red tape and the absence of banking facilities and telephone connections.

3.High Monetary Value – Moreover, it was being conducted through a barter system, as India and Pakistan could not reach agreement on currency transactions, even though its annual value grew from Rs 1 crore in 2008-09 to over Rs 3,000 crore at the present time.

1.Misuse of trade

  • It is unfortunate that the government has decided to “suspend” this Kashmir-specific confidence building measure now on the ground that it was being misused to push drugs, weapons and counterfeit currency into the Valley from across the border, as well as for trade in goods excluded from the list meant for cross-LoC trade.
  • After all, no trade routes into India are free from misuse.

2.Hawala –

  • Hawala, despite a severe crackdown, continues to exist as a channel through which Indians continue to send and receive money from abroad.
  • In the case of Kashmir, the absence of banking channels must have exacerbated the situation.

Alternatives –

1.Monitoring of trade routes-

  • If the government had apprehensions that the trade across the two sides of Kashmir was being used by terrorist benamis or other unscrupulous elements, the better course of action would have been to monitor the crossing points at Uri and Chakkan da Bagh through which it was taking place four times a week.
  • This is all in a day’s work for customs and other enforcement agencies, and this is how drugs were caught being smuggled in trucks from Pakistan Occupied Kashmir.

Conclusion

1. Signals loss of control – Calling off an entire trade route because it is being misused by some sends out the message that the government has lost control, as with the highway closure.

2. Push to alienation – Plus, drawing increasingly tighter red lines in Kashmir, India only makes it more difficult for itself to get out of the corners it has painted itself into when the time for dialogue comes, as it will eventually.

3. Election motives – But if this has been done to create the impression in the rest of the country in the midst of election season that the government is unsparing with Kashmiris, it can only be described as cutting the nose to spite the face.

Foreign Policy Watch: India-Pakistan

[op-ed snap] Humanise the law

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Forest Rights Act

Mains level : There is a need to tranform present forest law towards partnership and collaboration approach.


CONTEXT

Modernising colonial era laws is a long-delayed project, but the draft Indian Forest Act, 2019 is woefully short of being a transformative piece of legislation.

Need for reforms

1. Colonial Legacy – The original law, the Indian Forest Act, 1927, is an incongruous relic, its provisions having been drafted to suit the objectives of a colonial power that had extractive uses for forests in mind.

2. Ensuring Well being of Forest and forest dwellers – A new law enacted should make a departure and be aimed to expand India’s forests, and ensure the well-being of traditional forest-dwellers and biodiversity in these landscapes.

3. Community-led, scientific conservation – The need is for a paradigm that encourages community-led, scientifically validated conservation. This is critical, for only 2.99% of India’s geographic area is classified as very dense forest; the rest of the green cover of a total of 21.54% is nearly equally divided into open and moderately dense forest, according to the State of Forest Report 2017.

Draft Bill’s Proposals

1.Bureaucratic control of forests

  • The draft Bill reinforces the idea of bureaucratic control of forests, providing immunity for actions such as use of firearms by personnel to prevent an offence.
  • The hardline policing approach is reflected in the emphasis on creating infrastructure to detain and transport the accused, and to penalise entire communities through denial of access to forests for offences by individuals.
  • Such provisions invariably affect poor inhabitants, and run counter to the empowering and egalitarian goals that produced the Forest Rights Act.

Way forward to conserve Forest

1. Importance of Forests – India’s forests play a key role in moderating the lives of not just the adivasis and other traditional dwellers, but everyone in the subcontinent, through their impact on the climate and monsoons.

2. Improvement through collaboration – Their health can be improved only through collaboration.

    • Any new forest law must, therefore, aim to reduce conflicts, incentivise tribals and stop diversion for non-forest uses.
    • No commercial exploitation – This can be achieved by recognising all suitable landscapes as forests and insulating them from commercial exploitation.
    •  Partnership with communities and scientists – Such an approach requires a partnership with communities on the one hand, and scientists on the other. For decades now, the Forest Department has resisted independent scientific evaluation of forest health and biodiversity conservation outcomes.

Weaknesses of present Environment Policy

  •  Weakened public scrutiny – In parallel, environmental policy has weakened public scrutiny of decisions on diversion of forests for destructive activities such as mining and large dam construction.
  • Dilution of public hearings – Impact assessment reports have mostly been reduced to a farce, and the public hearings process has been diluted.

Conclusion

  • The government needs to launch a process of consultation, beginning with the State governments to ensure that a progressive law is adopted by all States, including those that have their own versions of the existing Act.
  • The Centre must hear the voice of all stakeholders and communities, including independent scientific experts.

Forest Conservation Efforts – NFP, Western Ghats, etc.

The Face of Disasters 2019 Report

Mains Paper 3 : Disaster Management |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : The Face of Disasters 2019 Report

Mains level : Multiple facets of Disasters in India and thier effective management


News

  • The Face of Disasters 2019 report was recently published by Sustainable Environment and Ecological Development Society (SEEDS).

The Face of Disasters 2019 Report

  • The ‘Face of Disasters 2019’ report released by SEEDS as part of its 25th anniversary, analyses past trends, looking at disasters from a broader perspective to capture their varied facets.
  • The report talks about the need to look at disaster vulnerabilities that lie under the radar, waiting to strike.
  • Eight key areas have emerged that will be critical to consider as we look ahead:
  1. Water and the changing nature of disaster risk: A ‘new normal’ of rainfall variability is bringing challenges of too much and too little water, often in parallel.
  2. No disaster is ‘natural’: Risks lurking under the radar slip through the cracks because they don’t meet the idea of a ‘natural disaster’.
  3. The silent events: The disasters that go unseen leave those affected at even greater risk.
  4. Land becomes water (and water becomes land): Changes to the coastline are already affecting livelihood sources and will be hotspots for vulnerability in the future.
  5. The complexity of disaster impact: Beyond official ‘damages’, the long-term and uncaptured disaster impacts have life-changing consequences for affected communities.
  6. The urban imperative: Risk is rapidly urbanising and will affect everyone.
  7. Transformations in the third pole: Himalayan glaciers are melting, with serious implications for the whole region.
  8. Planning for what you can’t see: Earthquake risk is looming large under the radar, but are we prepared?

Significance of the report

  • Analysis of past trends shows us that 2019 will see unusual flooding, as well as heatwaves and drought that are already ongoing.
  • The complexity of disasters today requires a proactive and multi-pronged approach.
  • A single mega-disaster can wipe out hard-won development gains and recurrent small-scale stresses keep vulnerable families in a cycle of poverty.
  • While this multiple event pattern is repeated every year, only a few really capture the public attention. Other risks continue to intensify under the radar.

Way Forward

  • Current trends are reinforcing that disasters have multiple facets and complexities.
  • In 2018, India witnessed nearly every type of natural hazard, except a major earthquake and related events.
  • Floods, droughts, heat and cold waves, lightning strikes, cyclones and even hailstorms, a wide range of disasters impacted most of the country.
  • This poses some critical questions and issues and also points to risks that lie ahead. At the core is the idea that disasters cannot be seen in isolation anymore.
  • There is a clear need for comprehensive understanding of risks, and hyper-localised plans and allocation of resources to reduce them.

Back2Basics

Sustainable Environment and Ecological Development Society (SEEDS)

  • SEEDS, a non profit voluntary organization, is a collective endeavor of young professionals drawn from development related fields.
  • It originated as an informal group of likeminded persons, getting together for the purpose of creative research projects of academic interest.
  • The group was later formalized in early 1994 and has been active in the field ever since.
  • It is involved in research activities in Community Development, Disaster Management, Environmental Planning, Transport Planning, and Urban and Regional Planning.
  • Activities are carried out on behalf of government, semi – government and international development agencies. Independent programs on vital issues are also taken up.
Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.

Voting rights of undertrials and convicts

Mains Paper 2 : Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Article 32, 326

Mains level : Voting rights of Prisoners


News

  • The Supreme Court is hearing a plea questioning an electoral law which denies undertrials and convicts their right to vote.
  • The petition has been moved under Article 32 of the Indian Constitution.

Voting rights of Prisoners

  • Section 62(5) of the RP Act of 1951 mandates that “no person shall vote at any election if he is confined in a prison, whether under a sentence of imprisonment or transportation or otherwise, or is in the lawful custody of the police”.
  • The provisions however exempt a person held under preventive detention from this rigor.

Invokes violation of FR

  • The petition highlights how the Section sees both an under-trial and a convicted person equally. The former’s guilt is yet to be proved in a court.
  • A person is innocent until proven guilty by law. Despite this, it denies an under-trial the right to vote but allows a detainee the same. However, a person out on bail is allowed to cast his vote.
  • The plea argued that the provision violates the rights to equality, vote (Article 326) and is arbitrary. It is not a reasonable restriction.

Back2Basic

Article 32 of the Indian Constitution

  • The right to move the SC by appropriate proceedings for the enforcement of the Fundamental Rights is guaranteed under this article.
  • The SC shall have power to issue directions or orders or writs any of the FRs.
  • Parliament can empower any other court to issue directions, orders and writs of all kinds (for HC, under 226).
  • The right to move the Supreme Court shall not be suspended except by President during a national emergency (Article 359).
  • Supreme Court has been vested with the powers for to provide a remedy for the protection of the FRs.
  • Only FRs can be enforced under Article 32 and not any other like non-fundamental constitutional rights, statutory rights, customary rights etc.
Electoral Reforms In India

China backs “Wuhan spirit” despite differences on BRI

Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Concerns raised by Belt and Road Initiative


News

  • At Belt and Road Forum for International Cooperation, Chinese authorities were emphatic that ties between India and China were insulated from their differences on the BRI.
  • China said that it is preparing for a summit between their leaders as a follow-up to last year’s Wuhan informal summit between Prez Xi Jinping and PM Modi.

Wuhan Spirit

  • The two leaders had a very successful meeting in Wuhan in April 2018.
  • Particularly, they established mutual trust and they jointly planned for the future of improvement and the strengthening of the China-India relationship.
  • India and China were currently limiting the threshold of their differences so that overall development of ties remained unhampered.
  • They agreed to significantly enhance efforts to build on the convergences through the established mechanisms in order to create the broadest possible platform for the future relationship.
  • They agreed to handle the differences through peaceful discussion within the context of the overall relationship, bearing in mind the importance of respecting each other’s sensitivities, concerns and aspirations.

Back2Basics

Belt and Road Initiative

[Burning Issue] Belt and Road Initiative

Foreign Policy Watch: India-China

Western Disturbances

Mains Paper 1 : Geographical Features & Their Location |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Western Disturbances

Mains level : Western Disturbances and its impact on India


News

  • Under the continued influence of a western disturbance, various parts of the country received unprecedented rainfall and hailstorms few days back.

Western Disturbance

  • A Western Disturbance is an extratropical storm originating in the Mediterranean region that brings sudden winter rain to the northwestern parts of the Indian subcontinent.
  • It is a non-monsoonal precipitation pattern driven by the westerlies.
  • The moisture in these storms usually originates over the Mediterranean Sea and the Atlantic Ocean.
  • Extratropical storms are a global phenomena with moisture usually carried in the upper atmosphere, unlike their tropical counterparts where the moisture is carried in the lower atmosphere.
  • They are important for the development of the Rabi crop, which includes the locally important staple wheat.

Importance of Western Disturbances

  • The western disturbances affect weather conditions during the winter season up to Patna (Bihar) and give occasional rainfall which is highly beneficial for the standing rabi crops.
  • The arrival of these causes precipitation leading to an abrupt decrease in air temperature over North-West India.
  • Western Disturbances also bring heavy snowfall in the Himalayan Region and a cold wave to north Indian plains.
Climate Change Impact on India and World – International Reports, Key Observations, etc.