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e-Commerce: The New Boom

E-commerce rules 2020

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Types of e-commerce model

Mains level : Paper 3- Rules to regulate the e-commerce

The article analyses the various restrictions under The Consumer Protection (E-Commerce) Rules, 2020 to regulate all commercial transactions and issues with such restrictions.

Context

  • The recent rules relating to e-commerce, issued by the ministry of consumer affairs, food and public distribution, under the Consumer Protection Act, 2019 needs some changes.

What the recent rules specify

  • The Consumer Protection (E-Commerce) Rules, 2020, notified on July 23, regulate all commercial transactions sold over a digital or electronic network.
  • The e-com rules currently recognise two e-commerce business models, namely, marketplace model and inventory-based model.
  • The rules have separate specified provisions for marketplace- and inventory-based entities.
  • The e-com rules require that all information on the return, refund, exchange, warranty and guarantee, delivery and shipment of the goods or services being sold, including their country of origin, be provided on the platform.
  • Such details enable consumers to make an informed decision.

What the new rules seek to achieve

  • The country of origin requirement is significant as India and several other countries are currently re-negotiating their free trade agreements.
  • E-com rules prohibit unfair trade practices by entities and sellers on marketplaces and manipulation of price.
  • The entities are prohibited from manipulating the price of the goods or services to gain unreasonable profit by imposing unjustified price or charges on consumers.

Issues with the rules

  • It remains unclear as to what would constitute price manipulation.
  • It also remain unclear how the e-commerce entities and sellers are expected to navigate these roadblocks without falling foul of such provisions.
  • Both the marketplace entity and sellers are now required to set up a grievance redressal mechanism, small businesses may not be in a position to comply.
  • The rules also prohibit an e-commerce entity from levying a charge for cancellation post confirmation.
  • While the provisions may be intended as safeguards that ensure a level-playing field, some of these conditions are impractical.
  • Applying identical rules does not convey a business-friendly approach.

Investment restrictions

  • The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 currently recognise the marketplace and inventory model.
  • It permit 100% FDI under the automatic route to marketplace entities as also to those engaged in single-brand retail.
  • Foreign investments, up to 51%, are permitted in multi-brand retail with prior government approval.
  • As per the non-debt rules, entities engaged in single-brand retail are permitted to undertake retail trading through e-commerce.
  • However, single-brand retail trading through e-commerce has to open a brick-and-mortar store within two years from the date it commences online retail.
  • Retail trading, in any form, by means of e-commerce, is not permissible for entities engaged in inventory-based multi-brand retail trading and having foreign investment.

Consider the question “What are the objectives sought to be achieved through The Consumer Protection (E-Commerce) Rules, 2020 to regulate commercial transactions? What are the issues with the rules?”

Conclusion

The commercial sector is anxious for India to consider relaxing some of these requirements, or extending the time period for compliance, given that brick-and-mortar operations may not be possible in the foreseeable future.


Source-

https://www.financialexpress.com/opinion/e-commerce-rules-a-one-size-fits-all-approach-some-need-to-be-relaxed/2071953/


Back2Basics: Invenetory model and marketplace model

  • Marketplace model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
  • The main feature of the market place model is that the e-commerce firm like flipkart, snapdeal, amazon etc. will be providing a platform for customers to interact with a selected number of sellers.
  • Inventory model of ecommerce means an ecommerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.
  • The main feature of inventory model is that the customer buys the product from the ecommerce firm.

Higher Education – RUSA, NIRF, HEFA, etc.

Economics of education

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Financial challenges education sector faces in India

The article delineates the challenges academic institutions in India faces in the wake of Covid disruption and suggests some measures to deal with the challenges.

Context

Disruption in the wake of pandemic raised the spectre of educational institutions shuttering their doors completely or taking unprecedented steps that have invariably affected jobs and livelihoods.

Economics of the academics

  • Economics has always been a part of academics; it is only in the present circumstances that it has become all the more apparent.
  • Management in private institutions, is going to meet demands on the one hand and availability of resources on the other.
  • One may call this new phenomenon “acadonomics”.
  • “Acadonomics” would imply a careful allocation of resources keeping in mind the transient nature of the issue of how long it is going to take to come back to the steady state of affairs that it once was.
  • ‘Acadonomics’ will also involve seeing the economics of moving on to an online mode of the teaching-learning process.

Comparison with the West

  • The academic choices are not the same for all countries across the world.
  • In the United States the elite private and state subsidised universities have endowments that can be used for a range of academic activities.
  • Top 10 of the U.S. have a cushion of anywhere between $10 billion to $40 billion.
  • By contrast, private academic institutions in India do not have any such buffers.
  • None of the institutions in India possesses big corpuses from alumni or industry.
  • Their survival, for the most part, is on the annual income that comes from tuition and the assortment of other fees collected.

Private education in India

  • Private institutions in India are hardly in a position to meet an eventuality such as COVID-19.
  •  In an educational set-up in India, nothing can be reduced — the norms cannot be lowered nor can the infrastructure be dismantled.
  •  For the most part, the fixed and operational costs remain the same, and infrastructure once created cannot be shrunk.
  • The downside to self-financed institutions is that in the time of the pandemic and loss of jobs, students plead inability to pay the requisite fee.
  • Which places additional burden on the management which feels already stretched because of existing commitments.

Dual mode of learning and issues

  • 1) Cost for persisting with a dual mode of the teaching-learning process is going to be quite prohibitive for the next few years.
  • The scaling of operations that would include the dual modes of online and offline is going to be expensive.
  • 2) The online teaching mode brings with it increased costs of IT infrastructure such as network bandwidth, servers, cloud resources and software licensing fees.
  • 3) Online teaching means new hiring in the IT sector and increased costs due to engagements with Massive Open Online Courses, or MOOCs, and other online platforms.
  • 4) Online teaching means setting up multiple studios and educational technology centres which translate into investments in high technology.
  • 5) Creation of virtual laboratories across all domains of studies and examination centres, etc. would add to the woes in terms of already depleted finances.
  • 6) Additional funds have to be allocated to train faculty for online teaching.

Way forward

  • The Centre and State governments should provide soft loans to students to stay with the educational course.
  • Students looking at online instruction would be disinclined to pay the same fee charged for offline instruction.
  • It would seem prudent for the government and regulatory bodies to not interfere in the fee structure, and, for the future, even consider a measure of higher degree of financial autonomy.
  • It is high time institutions in India are allowed to create coffers or corpuses for a rainy day.
  • Educational institutions could come to be treated like any other corporate body, with an allowable small margin of profit.

Consider the question “What are the challenges faced by the education system in the aftermath of the pandemic. Suggest ways to mitigate the impact.”

Conclusion

‘Acadonomics’ of the future will not only decide the fate of the academic sector in India but also its quality, ranking, research, innovation potential and its collective impact on our country’s economy.

Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Aiming for wider consumer base and directing public spending accordingly

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Widening consumer base to revive growth

The article suggests the widening of consumer base rather than increasing consumption. To augment that, the government should also direct the spending towards such sectors which would help in broadening of the base.

Prescription for long term growth: Broadening the consumer base

  • India entered the pandemic with declining growth and limited scope for a conventional and large fiscal stimulus.
  • The NSS 68th round consumption survey indicates that in urban India, the top 20 per cent of the population accounted for nearly 55 per cent of discretionary consumption and 45 per cent of all consumption.
  •  The narrow consumption base coupled with uncertainty over the demographic dividend could belie India’s long-term investment attractiveness.
  • With or without the pandemic, the prescriptions for long-term growth remain the same — broaden the consumer base.
  • This broadening of the consumer base should happen through empowering the low and middle-income consumers.

Why can’t the government just spend to revive growth

  • 1) Temporary incomes coupled with job/income uncertainty will induce precautionary savings without any impact on growth.
  • 2) With revenues declined, funding of additional expenditure is through higher borrowings.
  • Any incremental debt should be seen in the context of future investments being hampered due to current consumption.
  • India’s public debt/GDP will likely reach around 85 per cent and the consolidated gross fiscal deficit to GDP ratio could be around 12.5 per cent this year. 

Way forward

  • India needs to broaden its consumer base beyond the top 10-20 per cent of the population to improve long-term growth prospects.
  • To achieve this we will need well-paid employment for the bottom and middle segments.
  • The “safe” group of India’s workforce is extremely small.
  • The PLFS 2018-19 report places around 24 per cent of the workforce in the regular wage/salary category.
  • Within this segment, around 40 per cent do not have a written contract, paid leaves, or security while 70 per cent do not have any written contract.
  • These sharp skews in consumption and labour become a substantial risk for a consumption-led growth in the aftermath of a crisis.
  • The PLFS 2018-19 report indicates that around 50 per cent of the rural non-agriculture workforce.
  • 35 per cent of the urban workforce is engaged in the construction and manufacturing sectors.
  • The rebuild and recover phase should aim for a wider consumer base with infrastructure and manufacturing as the two pillars.
  • To make manufacturing easier, the focus should be on labour reforms, fewer/quicker approvals, reducing the compliance burden, and promoting export-oriented sectors.
  • Policies should not become too inward-looking such that export promotion becomes difficult.

Directing public spending and policies appropriately

  • Most public spending should be directed towards roads, railways, infrastructure, healthcare and educational facilities.
  • To promote infrastructure creation along with private sector participation, the government needs to charge an economic price for goods and services such as power, irrigation, and public utilities.
  • Establish the rule of law with minimal interference in pricing, streamline processes for quick approvals and ensure timely payments to private operators.
  • The government should also signal its vision along with a financing strategy through sharper expenditure management, enhanced market borrowings, setting up of a Development Financing Institution, and an asset monetisation programme.

Conclusion

To achieve economic growth of 7-8 per cent the government needs to start addressing large infrastructure deficit, the weak financial sector, archaic land and labour laws, and the administrative and judicial hurdles.

Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

AGR dues issue in Telecom Sector

Note4Students

From UPSC perspective, the following things are important :

Prelims level : AGR issue

Mains level : AGR disputes of Telecom companies

The Supreme Court has held that telecom firms will get 10 years to clear their adjusted gross revenue or AGR dues and that the National Company Law Tribunal (NCLT) should decide whether or not spectrum can be sold under the Insolvency and Bankruptcy Code.

Try this PYQ:

Q. In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

  1. Ad Hoc Committees set up by the Parliament
  2. Parliamentary Department Related Standing Committees
  3. Finance Commission
  4. Financial Sector Legislative Reforms Commission
  5. NITI Aayog

Select the correct answer using the code given below:

(a) 1 and 2

(b) 1, 3 and 4

(c) 3, 4 and 5

(d) 2 and 5

Supreme Court rule on AGR dues

  • In its judgment, the SC gave all telcos a 10-year timeline to complete the payments of AGR dues, instead of the old 20-year schedule suggested by the DoT.
  • It also directed telcos to pay 10 per cent of the total AGR dues by March 31, 2020, following which they can make payments in annual instalments between 2021 and 2031.
  • The non-payment of dues in any year would lead to the accrual of interest and invite contempt of court proceedings against such companies.
  • A crucial issue of whether the spectrum could be sold under IBC will now be decided by the National Company Law Tribunal.

What is AGR?

  • Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
  • It is divided into spectrum usage charges and licensing fees, pegged between 3-5 per cent and 8 per cent respectively.

What is the issue about?

  • All the telecom companies that operate in India pay a part of their revenues as licence fee and spectrum charges to the Department of Telecommunications (DoT) for using the spectrum owned by the government.
  • In its definition of AGR, the DoT had said that telcos must cover all the revenue earned by them, including from non-telecom sources such as deposit interests and sale of assets.
  • The telecom companies were opposed to this and had challenged this definition of AGR in several forums, including the Supreme Court.
  • On October 24, 2019, the SC had upheld the DoT’s definition of AGR.
  • Though the telcos sought a review of the judgment, it was dismissed by the top court which had then insisted that telcos clear all the dues by January 23, 2020.

Indian Army Updates

Special Frontier Force: The Vikas Battalion

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Special Frontier Force (SFF)

Mains level : India's security forces

There have been reports that a Special Frontier Force (SFF) unit, referred to as Vikas Battalion, has been instrumental in occupying some key heights on the LAC.

Try this question for mains:

Q.“It cannot be business as usual with China after the border clash.” Critically comment.

What is the Special Frontier Force (SFF)?

  • SFF was raised in the immediate aftermath of the 1962 Sino-India war.
  • It was a covert outfit which recruited Tibetans (now it has a mixture of Tibetans and Gorkhas) and initially went by the name of Establishment 22.
  • It was named so because it was raised by Major General Sujan Singh Uban, an Artillery officer who had commanded 22 Mountain Regiment.
  • He, therefore, named the new covert group after his regiment. Subsequently, the group was renamed as Special Frontier Force.
  • SFF now falls under the purview of the Cabinet Secretariat where it is headed by an Inspector General who is an Army officer of the rank of Major General.

Is SFF a part of the Army?

  • Strictly speaking, the SFF units are not part of the Army but they function under the operational control of the Army.
  • The units have their own rank structures which have equivalent status with Army ranks.
  • However, they are highly trained Special Forces personnel who can undertake a variety of tasks which would normally be performed by any Special Forces unit.
  • The SFF units, therefore, function virtually as any other Army unit in operational areas despite having a separate charter and history.

Major operations conducted

  • There are several overt and covert operations in which SFF units have taken part over the years.
  • They took part in operations in the 1971 war, Operation Blue Star in Golden Temple Amritsar, Kargil conflict and in counter-insurgency operations in the country.
  • There are several other operations too in which the SFF has participated but the details are classified.

Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

Pinaka Missile System

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Pinaka Multibarrel Missiles

Mains level : India-China LAC tensions

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.

Indian Army Updates

Exercise Indra 2020

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Exercise Indra

Mains level : India-Russia defence ties

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.