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August 2020

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

Despite the messaging, it is still advantage China


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Providing alternative investment destination to China and policy changes in India

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

Is India becoming alternate supply source and investment destination?

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

India’s strengths

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

Why China is a favoured destination

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

Way forward

1) Focus on the States

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

2) Focus on the policy framework

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


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

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

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


From UPSC perspective, the following things are important :

Prelims level : Various indicators in Ease of Doing Business index

Mains level : Paper 3- Ease of doing business Index and issues with it

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


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

Why India should be concerned

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

Does ease of doing business have predictive power?

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

Other flaws in the Index

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

Lack of theoretical basis: Major flaw

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

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


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

Human Rights Issues

UN’s guidelines on Access to Social Justice for People with Disabilities


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Rights of PWDs

The United Nations has released it’s first-ever guidelines on access to social justice for people with disabilities to make it easier for them to access justice systems around the world.

Note: These guidelines can be used in mains answer while substantiating their rights.

Defining a person with a disability

  • The UN Convention on the Rights of Persons with Disabilities was adopted in 2007 as the first major instrument of human rights in the 21st century.
  • It defines persons with disabilities as those “who have long-term physical, mental, intellectual or sensory impairments which in interaction with various barriers may hinder their full and effective participation in society on an equal basis with others”.

Highlights of the Guidelines

The guidelines outline a set of 10 principles and detail the steps for implementation. The 10 principles are:

  • Principle 1: All persons with disabilities have the legal capacity and, therefore, no one shall be denied access to justice on the basis of disability.
  • Principle 2: Facilities and services must be universally accessible to ensure equal access to justice without discrimination of persons with disabilities.
  • Principle 3: PWDS including children with disabilities, have the right to appropriate procedural accommodations.
  • Principle 4: PWDS have the right to access legal notices and information in a timely and accessible manner on an equal basis with others.
  • Principle 5: PWDS are entitled to all substantive and procedural safeguards recognized in international law on an equal basis with others, and States must provide the necessary accommodations to guarantee due process.
  • Principle 6: PWDS have the right to free or affordable legal assistance.
  • Principle 7: PWDS have the right to participate in the administration of justice on an equal basis with others.
  • Principle 8: PWDS have the rights to report complaints and initiate legal proceedings concerning human rights violations and crimes, have their complaints investigated and be afforded effective remedies.
  • Principle 9: Effective and robust monitoring mechanisms play a critical role in supporting access to justice for persons with disabilities.
  • Principle 10: All those working in the justice system must be provided with awareness-raising and training programmes addressing the rights of persons with disabilities, in particular in the context of access to justice.

Significance for India

  • As per statistics maintained by the UN, in India 2.4 per cent of males are disabled and two per cent of females from all age groups are disabled.
  • Disabilities include psychological impairment, intellectual impairment, speaking, multiple impairments, hearing, seeing among others.
  • In comparison, the disability prevalence in the US is 12.9 per cent among females and 12.7 per cent among males.
  • Disability prevalence in the UK is at 22.7 per cent among females and 18.7 per cent among males.

Electoral Reforms In India

Need for a Common Electoral Roll


From UPSC perspective, the following things are important :

Prelims level : Common Electoral Roll

Mains level : One Nation One Election Idea

The Prime Minister’s Office earlier this month held a meeting with representatives of the Election Commission and the Law Ministry to discuss the possibility of having a common electoral roll for elections to the panchayat, municipality, state assembly and the Lok Sabha.

Try this question:

Q.Discuss how a common electoral roll and simultaneous elections are ways to save the enormous amount of effort and expenditure on Elections in India.

Electoral Rolls in India

  • In many states, the voters’ list for the panchayat and municipality elections is different from the one used for Parliament and Assembly elections.
  • The distinction stems from the fact that the supervision and conduct of elections in our country are entrusted with two constitutional authorities — the Election Commission (EC) of India and the State ECs.
  • Set up in 1950, the EC is charged with the responsibility of conducting polls to the offices of the President and Vice-President of India, and to Parliament, the state assemblies and the legislative councils.
  • The SECs, on the other hand, supervise municipal and panchayat elections. They are free to prepare their own electoral rolls for local body elections, and this exercise does not have to be coordinated with the EC.

So do all states have a separate voters list for their local body elections?

  • Each SEC is governed by a separate state Act. Some state laws allow the SEC to borrow and use the EC’s voter’s rolls in toto for the local body elections.
  • In others, the state commission uses the EC’s voters list as the basis for the preparation and revision of rolls for municipality and panchayat elections.
  • Currently, all states, except UP, Uttarakhand, Odisha, Assam, MP, Kerala, Odisha, Assam, Arunachal Pradesh, Nagaland and the UT of Jammu and Kashmir, adopt EC’s rolls for local body polls.

Why need a common electoral roll?

  • First, the common electoral roll is among the promises made by the govt. in its manifesto for the Lok Sabha elections last year.
  • It ties in with the party’s commitment to hold elections simultaneously to the Lok Sabha, state assemblies and local bodies, which is also mentioned in the manifesto.
  • The incumbent government has pitched a common electoral roll and simultaneous elections as a way to save an enormous amount of effort and expenditure.
  • It has argued that the preparation of a separate voters list causes duplication of essentially the same task between two different agencies, thereby duplicating the effort and the expenditure.
  • The pitch for a single voters list is not new. The Law Commission recommended it in its 255th report in 2015. The EC too adopted a similar stance in 1999 and 2004.

How it can be implemented?

  • In the meeting called by the PMO, two options were discussed.
  • First, a constitutional amendment to Articles 243K and 243ZA that gives the power of superintendence, direction and control of preparation of electoral rolls and the conduct of local body elections to the SECs.
  • The amendment would make it mandatory to have a single electoral roll for all elections in the country.
  • Second, to persuade the state governments to tweak their respective laws and adopt the Election Commission’s (EC) voters list for municipal and panchayat polls.

J&K – The issues around the state

New rules for Transaction of Business of the Govt. of UT of J&K Rules, 2019


From UPSC perspective, the following things are important :

Prelims level : Art. 370

Mains level : Administrative changes in J and K

The Ministry of Home Affairs (MHA) has notified new rules for administration in the UT of Jammu and Kashmir that specify the functions of the Lieutenant Governor (LG) and the Council of Ministers.

Tap to read more about: Reorganization of J&K

New Rules for J&K

  • The new rules have been defined under Section 55 of the Jammu and Kashmir Reorganization Act, 2019.

What are they?

(1)Executive functions of the L-G

  • According to the rules the “police, public order, All India Services and anti-corruption” will fall under the executive functions of the L-G.
  • Chief Minister or the Council of Ministers will have no say in their functioning.

(2)Minority Community interests

  • The proposals or matters which affect or are likely to affect peace and tranquillity or the interest of any minority community, the SCs, the STs and the Backward Classes shall essentially be submitted to the LG through the Chief Secretary, under intimation to the CM, before issuing any orders.

(3)Service Matters

  • The Council of Ministers, led by the CM, will decide service matters of non-All India Services officers, proposal to impose a new tax, land revenue, sale grant or lease of government property, reconstituting departments or offices and draft legislation.

(4)Difference of Opinion

  • In case of difference of opinion between the L-G and a Minister when no agreement could be reached even after a month, the “decision of the Lieutenant Governor shall be deemed to have been accepted by the Council of Ministers”.

(5)Relation with the Centre

  • According to the rules, “any matter which is likely to bring the Government of the UT into controversy with the Central Government or with any State Government” shall be brought to the notice of the L-G and the CM by the Secretary concerned through the Chief Secretary.
  • All communications received from the Centre, including those from the PM and other Ministers, shall be submitted by the Secretary to the Chief Secretary, the Minister in charge, the CM and the L-G for information after their receipt.

(6)Various departments

  • Under the rules, there will be 39 departments in the UT, such as school education, agriculture, higher education, horticulture, election, general administration, home, mining, power, Public Works Department, tribal affairs and transport.

Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

[pib] Indian breed of Pet Dogs


From UPSC perspective, the following things are important :

Prelims level : Various breeds mentioned

Mains level : NA

In the latest address of Mann ki Baat, PM has talked contributions of dogs in the security forces and emphasized on raising and rearing of various breeds of Indian native dogs.

Try this PYQ:

Q.What is/are unique about ‘Kharai camel’, a breed found in India?

  1. It is capable of swimming up to three kilometres in seawater.
  2. It survives by grazing on mangroves.
  3. It lives in the wild and cannot be domesticated.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Answer: (a)

Indian breeds that PM talked about:

(1)Mudhol hounds

  • The Mudhol hounds come from the region bordering Karnataka and Maharashtra.
  • According to a popular legend Ch. Shivaji Maharaj bred and used these dogs in his army.
  • The breed was named after the erstwhile princely state of Mudhol, which was part of the Bombay Presidency in British India.
  • The last king of the state, King Malojirao Ghorpade, presented a pair of these puppies to King George V when he visited the UK and it was the English emperor who christened the dogs as Mudhol hounds.
  • Mudhol hounds have narrow heads that are disproportionately smaller to their bodies but are tall in height.

(2)Himachali hounds

  • The Himachali hounds are locally known as the ‘Gaddi’ dog and come from the Himalayan region. They are massive, mastiff-like dogs with thick fur to protect them from the cold.
  • They look similar to the Tibetan mastiff but are less bulky.
  • ‘Gaddi’ means shepherd in Urdu, and these dogs are primarily guarding livestock.


  • The breed Rajapalayam is believed to have originated from Tamil Nadu, and named after the state’s Rajapalayam city in the Virudhunagar district.
  • A rare breed, these dogs are only found in certain pockets of the state.
  • These dogs are white, lean, muscular, and have historically made good hunters.
  • They are believed to have fought alongside the Polygar soldiers against the British East India Company during the Polygar wars from 1799 to 1805.
  • This is why the Rajapalayam dogs are also known as ‘Polygar hounds’.

(4) Kanni and Chippiparai

  • The Kanni dog is another breed from Tamil Nadu, and its name translates to “pure” in Tamil after its fierce loyalty.
  • Like the Rajapalayam, Kanni dogs specialise in hunting hares, wild boars, and blackbucks.
  • However, since the Wildlife Protection Act of 1972 was passed, these dogs have been acting as guard dogs.
  • The Kennel Club of India, which maintains a registry of purebred dogs in India, has registered this dog under two names — Kanni and Chippiparai.


  • The Combai dogs also originate from Tamil Nadu. They are tan-coloured with a black snout and appear shorter and stouter than the Rajapalayam. They are classified as terriers.
  • Like the Kanni and Rajapalayam, these dogs are rare and a dying breed and were historically used for boar hunting and guarding purposes.
  • The CRPF recently recruited Combai dogs into their Dog Breeding and Training School.

History- Important places, persons in news

Person in news: Noor Inayat Khan


From UPSC perspective, the following things are important :

Prelims level : Noor Inayat Khan

Mains level : Not Much

World War II spy Noor Inayat Khan is now the first woman of Indian origin to be commemorated by the distinct blue London plaque.

Try this PYQ:

Q.A recent movie titled “The Man Who Knew Infinity” is based on the biography of-

(a) S. Ramanujan
(b) S. Chandrasekhar
(c) S. N. Bose
(d) C. V. Raman

Noor Inayat Khan

  • A descendant of Tipu Sultan, Noor Inayat Khan became a secret agent during the Second World War.
  • She was the first woman radio operator to be infiltrated into occupied France in 1943 and worked under the code name ‘Madeleine’.
  • Renowned for her service in the Special Operations Executive, an independent British secret service set up by Winston Churchill in 1940.
  • Noor was Britain’s first Indian Muslim war heroine in Europe and the first female radio operator sent into Nazi-occupied France.
  • She was killed at the Dachau concentration camp in 1944 and was posthumously awarded the George Cross in 1949.

What are Blue Plaques?

  • The idea of placing commemorative plaques on historically significant buildings was first mooted in 1863.
  • The idea was to honour important people and organisations that have lived or worked in London buildings.
  • Currently, the blue plaque scheme is being run by the charity organisation, English Heritage that takes care of historic sites and buildings in England.
  • While Khan is the first woman of Indian origin to be honoured with a blue plaque, it has been erected on houses and venues associated with several Indian men including Mahatma Gandhi, Raja Ram Mohun Roy, B R Ambedkar, Sardar Patel and Swami Vivekananda among others.

GI(Geographical Indicator) Tags

In news: Channapatna Toys


From UPSC perspective, the following things are important :

Prelims level : GI Indications in news

Mains level : NA

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

Must read:

GI Tags in news for 2020 Prelims

All time GI tags in news

Channapatna Toys

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

Back2Basics: Geographical Indications in India

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

Foreign Policy Watch: India-Pakistan

Striving for amicable relations with Pakistan


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-Pakistan relations

The article pitches for the resumption of India-Pakistan relations. But there are obstacles on both the side which come in the way of such resumption.

Pakistan and relations over Kashmir issue

  •  In July, the Turkish president had assured Pakistan’s parliament of his country’s support for Islamabad’s Kashmir stand.
  • More recently, Malaysia’s former Prime Minister, Mahathir Mohamad, has reiterated his backing for that stand.
  • Iran’s current negotiations with China do not necessarily mean alignment with the latter’s Kashmir policy.
  • Saudi Arabia and the Gulf countries invited official criticism in Pakistan first time for their refusal to back Pakistan in its disputes with New Delhi.
  • Pakistan’s foreign minister had made a remark against Saudi Arabia over its reluctance to convene the meeting of IOC.
  • Given the long history of Saudi-Pakistani relations, such remarks suggest a high degree of frustration.

India’s vulnerabilities and relations with Pakistan

  • An excess of confidence and an unwillingness to think things through may be India’s vulnerabilities.
  • Army’s chief of staff made the statement this year, “If Parliament wants that area [PoK] should be ours at some stage, and if we get such orders, we will definitely act on those directions.”
  • Prime Minister made the statement regarding time of a week to 10 days to defeat the neighbouring country in case of war.

Picturing resumption of relations with Pakistan

  • In case of war, aware of the total devastation to follow, neither side in an India-Pakistan conflict will press the nuclear button.
  • On the other hand, it is also possible, before any war, to imagine negotiations that lead, not necessarily in that order, to a resumption of trade, travel and normal relations, the renunciation of terrorism, and the restoration of the democratic rights of the people of Kashmir.
  • While no realistic person today expects such talks, it is not a crime to picture them.


Amicable relations with Pakistan may seem remote but they are worth striving for.

Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Changing India’s health delivery landscape through NDHM


From UPSC perspective, the following things are important :

Prelims level : NDHM

Mains level : Paper 2- National Digital Health Mission

The National Digital Health Mission promises to transform the Indian healthcare system with the aid of technology. The article highlights the key aspects of the mission.

Building integrated digital health infrastructure through NDHM

  • NDHM is based on the principles of health for all, inclusivity, accessibility, affordability, education, empowerment, wellness, portability, privacy and security by design.
  • NDHM will build the backbone necessary to create an integrated digital health infrastructure.
  • With its key building blocks HealthID, DigiDoctor, Health Facility Registry, Personal Health Records, Telemedicine, and e-Pharmacy, the mission will bring together disparate stakeholders and radically strengthen and, thus change India’s healthcare delivery landscape.
  • NDHM is also a purposeful step towards the achievement of the United Nations’ Sustainable Development Goal of Universal Health Coverage.

Importance of digital intervention in health service

  • Digital interventions significantly enhance the outcomes of every health service delivery programme.
  • Importance of digital intervention is demonstrated in the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana scheme.
  • Under PM-JAY, 1.2 crore cashless secondary and tertiary care treatments have been provided using an indigenously developed state-of-the-art IT platform.
  • The Arogya Setu mobile app deploys ICT innovations for contract tracing.

Principal highlight of NDHM

1) Voluntary in nature

  • HealthID is entirely voluntary for citizens.
  • Its absence will not mean denial of healthcare to a citizen.
  • They can choose to generate their Health Account or ID using their Aadhaar card or digitally authenticable mobile number and by using their basic address-related details and email ID.
  • The use of Aadhaar, therefore, is not mandatory.

2) Data sharing based on consent

  • Providing access to and sharing of personal health records is a prerogative of the HealthID holder.
  • The consent of the health data owner is required to access this information or a part of it.The consent can be withdrawn anytime.
  • The personal health record will enable citizens to store and access their health data, provide them with more comprehensive information and empower them with control over their private health records.

3) Compliance with laws and fundamental rights

  • NDHM has been built within a universe of fundamental rights and legislation such as the Aadhaar Act and the IT Act 2008 as well as the Personal Data Protection Bill 2019.
  • This project is also informed by the entire gamut of Supreme Court judgments and core democratic principles of cooperative federalism.
  • The Mission gets its strategic and technical foundation from the National Digital Health Blueprint, the architectural framework of which keeps the overall vision of NHP 2017 at its core and ensures security and privacy by design.

4) Reaching out to the unconnected population

  •  NHDM is a digital mission led by technology powered by the internet.
  • So, to reach out to and empower the large number of “unconnected” masses specialised systems are being built and off-line modules that will be designed to reach out to the “unconnected”.

5) Partnership with all key stakeholders

  • The design of NDHM has been built on the principle of partnership with all key stakeholders — doctors, health service providers, technology solution providers and above all citizens.
  • Without their belief, trust, adoption, and stewardship, this mission will not achieve its desired result.

Consider the question “Examine the key aspects of the National Digital Heath Mission and how it could help transform the Indian healthcare landscape?”


NDHM is a mission whose time has come because health is the first step towards self-reliance and only a healthy nation can become Atma Nirbhar.

Goods and Services Tax (GST)

Issue of GST compensation to states


From UPSC perspective, the following things are important :

Prelims level : Provision of compensation to states under GST

Mains level : Paper 3- Issues of GST compensation to states.

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

The basis for compensation

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

GST compensation cess

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

Way forward

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


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

Goods and Services Tax (GST)

What is Compensation of GST?


From UPSC perspective, the following things are important :

Prelims level : GST Compensation

Mains level : Changes in taxation after GST regime

With Centre-State friction over pending compensation payments under the Goods and Services Tax (GST) taking a new turn in the 41st GST Council to meet, the strain on the finances of states is likely to continue in the near term.

Try this question from CSP 2018:

Q.Consider the following items:

  1. Cereal grains hulled
  2. Chicken eggs cooked
  3. Fish processed and canned
  4. Newspapers containing advertising material

Which of the above items is/are exempt under GST (Goods and Services Tax)?

(a) 1 only

(b) 2 and 3 only

(c) 1, 2 and 4 only

(d) 1, 2, 3 and 4

What is GST?

  • GST, being a consumption-based tax, would result in loss of revenue for manufacturing-heavy states.
  • GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
  • It is charged at the time of supply and depends on the destination of consumption.
  • For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).

Compensation under GST regime

  • Due to the consumption-based nature of GST, manufacturing states like Gujarat, Haryana, Karnataka, Maharashtra and Tamil Nadu feared a revenue loss.
  • Thus, GST Compensation Cess or GST Cess was introduced by the government to compensate for the possible revenue losses suffered by such manufacturing states.
  • However, under existing rules, this compensation cess will be levied only for the first 5 years of the GST regime – from July 1st, 2017 to July 1st, 2022.
  • Compensation cess is levied on five products considered to be ‘sin’ or luxury as mentioned in the GST (Compensation to States) Act, 2017 and includes items such as- Pan Masala, Tobacco, and Automobiles etc.

Alternatives to prevent losses

  • The input tax credit can help a producer by partially reducing GST liability by only paying the difference between the tax already paid on the raw materials of a particular good and that on the final product.
  • In other words, the taxes paid on purchase (input tax) can be subtracted from the taxes paid on the final product (output tax) to reduce the final GST liability.

Distributing GST compensation

  • The compensation cess payable to states is calculated based on the methodology specified in the GST (Compensation to States) Act, 2017.
  • The compensation fund so collected is released to the states every 2 months.
  • Any unused money from the compensation fund at the end of the transition period shall be distributed between the states and the centre as per any applicable formula.

Significance of GST compensation

  • States no longer possess taxation rights after most taxes, barring those on petroleum, alcohol, and stamp duty were subsumed under GST.
  • GST accounts for almost 42% of states’ own tax revenues, and tax revenues account for around 60% of states’ total revenues.
  • Finances of over a dozen states are under severe strain, resulting in delays in salary payments and sharp cuts in capital expenditure outlay amid the pandemic-induced lockdowns and the need to spend on healthcare.


Goods and Services Tax

Digital India Initiatives

GIS-enabled Land Bank System


From UPSC perspective, the following things are important :

Prelims level : Land Bank System

Mains level : Digital land records

A prototype of the National GIS-enabled Land Bank System was e-launched by Commerce and Industry Ministry for six States based on which land can be identified for setting up industries.

Try to answer this question in short:

Q.Discuss the benefits of digitizing land records in India.

Land Bank System

  • The system has been developed by the Integration of Industrial Information System (IIS) with state GIS (Geographic Information System).
  • IIS portal is a GIS-enabled database of industrial clusters/areas across the states.
  • On the system, more than 3,300 industrial parks across 31 states/UTs covering about 4,75,000 hectares of land have also been mapped out on the system.
  • The information available on the system will include drainage, forest; raw material heat maps (horticulture, agricultural, mineral layers); multilayer of connectivity.
  • IIS has adopted a committed approach towards industrial upgrading, resource optimization, and sustainability.

Various stakeholders

  • The initiative has been supported by the National e-Governance Division (NeGD), National Centre of Geo-Informatics (NCoG), Invest India, Bhaskaracharya Institute for Space Applications and Geo-Informatics (BISAG), and Ministry of Electronics and Informational Technology.

History- Important places, persons in news

Who was Dr. Dwarkanath Kotnis?


From UPSC perspective, the following things are important :

Prelims level : Dr Kotnis and his legacy

Mains level : NA

A bronze statue of Indian doctor Dwarkanath Kotnis is set to be unveiled in China.

Try this PYQ:

Q.A recent movie titled The Man Who Knew Infinity is based on the biography of

(a) S. Ramanujan
(b) S. Chandrasekhar
(c) S. N. Bose
(d) C. V. Raman

Dr. Dwarkanath Kotnis

  • He is revered in China for his contributions during the Chinese revolution headed by its founder Mao Zedong and World War II.
  • He hailed from Sholapur in Maharashtra came to China in 1938 as part of a five-member team of doctors sent by the Indian National Congress to help the Chinese during World War II.
  • He joined the Communist Party of China (CPC) in 1942 and died the same year at the age of 32.
  • Kotnis’ medical assistance during the difficult days of the Chinese revolution was praised by Chinese leader Mao Zedong.
  • His statues and memorials were also set in some of the Chinese cities in recognition of his services.

A revered personality in China

  • Late Chinese leader Mao Zedong was deeply affected by his death.
  • Mao wrote in his eulogy that “the army has lost a helping hand; the nation has lost a friend. Let us always bear in mind his internationalist spirit”.
  • Kotnis is remembered not only as a symbol inspiring medical students to work hard, but also an eternal bond between the people of China and India.

Wildlife Conservation Efforts

Species in news: Barn Owl


From UPSC perspective, the following things are important :

Prelims level : Barn Owl

Mains level : Not Much

With a thriving rat population playing havoc with its coconut yield, the UT of Lakshadweep hires barn owls for help.

Try this PYQ:

Q.The Red Data Books published by the International Union for Conservation of Nature and Natural Resources (IUCN) contains lists of:

  1. Endemic plant and animal species present in the biodiversity hotspots.
  2. Threatened plant and animal species.
  3. Protected sites for conservation of nature and natural resources in various countries.

Select the correct answer using the codes given below:

(a) 1 and 3

(b) 2 only

(c) 2 and 3

(d) 3 only

Barn Owl

IUCN status: Least Concerned

  • The barn owl is the most widely distributed species of owl in the world and one of the most widespread of all species of birds.
  • It is found almost everywhere in the world except for the polar and desert regions, Asia north of the Himalayas, most of Indonesia, and some Pacific islands.

What is Barn?

  • A barn is an agricultural building usually on farms and used for various purposes.
  • It refers to structures that house livestock, including cattle and horses, as well as equipment and fodder, and often grain.

Primary and Secondary Education – RTE, Education Policy, SEQI, RMSA, Committee Reports, etc.

[pib] Eklavya Model Residential Schools


From UPSC perspective, the following things are important :

Prelims level : Eklavya Model Residential Schools

Mains level : Tribal education

An Eklavya Model Residential School (EMRS) teacher was selected for National Award to Teachers 2020.

Note the specific features of EMRS. Each year in the CSP, there is a question related to tribes/tribal development.

Eklavya Model Residential Schools

  • EMRS started in the year 1997-98 to impart quality education to ST children in remote areas in order to enable them to avail of opportunities in high and professional education courses and get employment in various sectors.
  • Across the country, as per census 2011 figures, there are 564 such sub-districts out of which there is an EMRS in 102 sub-districts.
  • As per revised 2018 scheme, every block with more than 50% ST population and at least 20,000 tribal persons, will have an EMRS by the year 2022.
  • These schools will be on par with Navodaya Vidyalayas and will have special facilities for preserving local art and culture besides providing training in sports and skill development.

Features of EMRS

  • Admission to these schools will be through selection/competition with suitable provision for preference to children belonging to Primitive Tribal Groups, first-generation students, etc.
  • Sufficient land would be given by the State Government for the school, playgrounds, hostels, residential quarters, etc., free of cost.
  • The number of seats for boys and girls will be equal.
  • In these schools, education will be entirely free.

e-Commerce: The New Boom

Disintermediation from E-commerce


From UPSC perspective, the following things are important :

Prelims level : Disintermediation

Mains level : Paper 3- Duopoly in e-commerce in India

 E-commerce was expected to provide the level playing field. However, Indian e-commerce has been experiencing the duopoly and new entrant faces several difficulties.

What is disintermediation

  • The emergence of the internet was seen as a tool for marketers to reach consumers directly.
  • The term disintermediation meant taking intermediaries out of the loop.
  •  The aim was efficiency.
  • It was hoped that without local stockists and distributors in between, retail demand could be fulfilled at lower cost.
  • After all, anyone could put up a website and woo traffic.

What is the issue?

  • Today, the gains of online market addressal have converged into the hands of a few big winners in a winner-takes-all scenario.
  • Getting an app onto handsets often involves a toll paid to e-gatekeepers.
  • These apps created an entry barrier for the new entrants.
  • So far, single-brand apps have mostly failed, regardless of price baits.
  • After all, it is hard to beat the convenience of a single-touch window that lets shoppers load e-carts with all their needs.


E-com was once about snipping out distribution networks. With market access cornered by pioneers, now others want to get past these intermediaries. Only blockbuster apps can do it.

Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Boosting demand with wage hike


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Issue of wage growth

The article discusses the threat posed to the Indian economy by the subdued demand following the return of the labourers to their urban jobs.

Rural employment issue

  • About 30 million migrant workers rushed home to their villages during the pandemic.
  • About 60 per cent of out-migration from rural India is aspiration-led.
  • Income earned in urban jobs is 2.5 higher than earned in rural area.
  • Though rural economy has been recovering faster than the urban economy, this optimism could prove short-lived, as eventually the more long-lasting determinants of rural wages could prevail.

What are the determinants of rural wages

1) NREGA wages

  • The government has raised the rural employment guarantee programme (NREGA) wages and outlays.
  • Demand for the scheme is outpacing supply.
  • This demand-supply mismatch means that it may not be an effective driver of higher rural wages.

2) Low construction activities

  • Many rural Indians, especially those without land, have become building labourers.
  • 70 per cent of construction is related to real estate and property developers are dependent on funding from struggling non-banking financial companies.
  • Until this type of lending restarts, construction may not normalise.
  • And that means rural wages may not rise quickly either.

3) Rising debt level

  • The increase in borrowing and fall in inflation over the last few years has increased the “real” indebtedness of rural Indians.
  • This affected particularly the landowners who pay villagers to farm their land.
  • This is likely to hurt their ability to pay high wages.

3 Reasons why wage outlook could be dimmer

  • As migrant labours start to return to their urban jobs, their wage outlook appears to be bleak for 3 reasons.
  • 1) As during demonetisation, workers could find jobs again, but at lower wages.
  • 2) There could be a second-round of pandemic-led labour market weakness, driven by job losses and falling wages from the first round.
  •  3) We find that both rural and urban wages are driven by economic growth, India’s post-pandemic medium-term growth falling by one percentage point to 5 per cent does not bode well.

Way forward

  • Weak wages could keep demand subdued. To offset this policymakers have an important role to play.
  • 1) In particular, policymakers may have to ensure that capital is allocated efficiently.
  • After all, investment is the only way to increase the economy’s capacity to create well-paying jobs.
  • 2) Bringing back investment growth would also involve capital re-allocation.
  • This means taking it away from sectors that are not working and redeploying it in sectors that are.
  • Improving the Insolvency and Bankruptcy Code procedure is a key step here.
  • 3) Another important step is to improve the health of banks as they are the ones allocating capital by giving loans.
  •  Implementation of the 5-Rs — recognition, restructuring, resolution, recapitalisation and reforms — for the banking sector may be particularly useful here.

Consider the question “After supply-side disruption is over, India’s growth may suffer from the subdued wage growth. Suggest the steps to avoid this from happening.”


Supply disruption caused by reverse migration won’t last long, but led by lower wages, demand could remain weak, requiring policy intervention.

Foreign Policy Watch: India-China

Leveraging its market to force China to settle border issue


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-China relations

The article charts out the plan to leverage the potential and the present size of the India markets to settle the boundary dispute with China.

Boycott of Chinese goods: view and counterview

  • After Galwan incident, there have been calls for the boycott of Chinese goods.
  • Counter views have been expressed that the Indian economy is so dependent on China that the costs would be disproportionately higher for India.
  • Our dependence can be reduced substantially if there is a national will and resolve to do so.

Need for mutually acceptable boundary agreement

  • China may not be willing to go back substantially from the areas they have occupied.
  • Agreeing on maintaining peace and tranquillity or clarification of the LAC has left space for the Chinese to create border incidents which have now led to casualties.
  • So India needs to get China to seriously negotiate a mutually acceptable boundary agreement.

India could use its market as leverage

  • Size of Indian market: The size of the Indian market and its potential in the coming years provides India considerable leverage.
  • But to use this leverage, Indians, individual consumers as well as firms, have to accept that there would be a period of adjustment in which they would have to pay higher prices.
  • The Chinese have a competitive advantage and are integral to global supply chains.
  • But whatever they sell is, and can be, made elsewhere in the world.
  • Indian can produce everything imported by China: Most of what we import from China was, is and can be made in India itself.
  • With volumes and economies of scale, the cost of production in India would decline as it did in China.

Steps need to be taken to use market as leverage

  • Focus on those imports from China which have been increasing: The initial focus should be on items which are still being made in India and where imports from China have been increasing.
  • Depriciate Rupees: If the RBI let the currency depreciate in real terms it would be equivalent to an increase in import duties of about 10 per cent.
  • China-specific safeguard duties and use of non-tariff trade barriers should be used in segments like electrical appliances to let Indian producers expand production and increase market share.
  • Government Finances for expansion: The government should also facilitate the flow of finances for expansion and provide technical support for testing, improving quality and lowering costs of production.
  • Look for other players: In critical areas such as Active Pharmaceutical Ingredients, we need a vigorous approach to procure from elsewhere and have early production in India.
  • The government could provide support for environmental compliance to bring down costs of production.This would create demand for domestic goods and services.
  • There are strategic sectors where we should reduce vulnerability: Like scrutiny of -Chinese FDI, Chinese 5G participation etc.
  • Assured government procurement: In critical areas like solar panel and grid storage batteries private investment for manufacturing in India would be triggered by assured government procurement.

Consider the question “Size and potential of India market could be leverage by India to settle the issues it has with its neighbour. What India needs to achieve this is a strategy and its implementation. Comment.”


A sustained and graded economic response to the recent Chinese conduct on the border is needed. We should signal India’s firm resolve and willingness to bear the cost. China could choose to settle the border amicably and have full access to our market. We could then work together to make this the Asian century.

Minority Issues – SC, ST, Dalits, OBC, Reservations, etc.

States can have sub-groups among SCs/STs: Supreme Court


From UPSC perspective, the following things are important :

Prelims level : Presidential List

Mains level : Quota within Quota debate

A five-judge Bench of the Supreme Court has held that States can sub-classify Scheduled Castes and Scheduled Tribes in the Central List to provide preferential treatment to the “weakest out of the weak”.

Try this question for mains;

Q.Reservation is no more seen by the Supreme Court as an exception to the equality rule; rather, it is a facet of equality. Discuss this in light of the quest for sub-categorisation of Scheduled Castes/Tribes.

What is the sub-categorisation of SCs?

  • States have argued that among the SCs, there are some that remain grossly under-represented despite reservation in comparison to other SCs.
  • This inequality within the SCs is underlined in several reports, and special quotas have been framed to address it.
  • For example, in AP, Punjab, Tamil Nadu and Bihar, special quotas were introduced for the most vulnerable Dalits.
  • In 2007, Bihar set up the Mahadalit Commission to identify the castes within SCs that were left behind.

About the Judgement

  • The judgment is based on a reference to the Constitution Bench the question of law involving Section 4(5) of the Punjab Scheduled Caste and Backward Classes (Reservation in Services) Act, 2006.
  • The legal provision allows 50% of the reserved Scheduled Castes seats in the State to be allotted to Balmikis and Mazhabi Sikhs.

There lies struggle within castes: SC

  • There is a “caste struggle” within the reserved class as a benefit of reservation is being usurped by a few, the court pointed out.
  • The million-dollar question is how to trickle down the benefit to the bottom rung.
  • It is clear that caste, occupation, and poverty are interwoven.
  • The State cannot be deprived of the power to take care of the qualitative and quantitative difference between different classes… to take ameliorative measures, said the judgment.

Overruling the old judgment

  • With this, the Bench took a contrary view to a 2004 judgment delivered by another Coordinate Bench of five judges in the E.V. Chinnaiah case.
  • The judgment had held that allowing States to unilaterally “make a class within a class of members of the Scheduled Castes” would amount to tinkering with the Presidential list.
  • The judgment is significant as it fully endorses the push to extend the creamy layer concept to the Scheduled Castes and Scheduled Tribes.
  • Citizens cannot be treated to be socially and educationally backwards till perpetuity; those who have come up must be excluded like the creamy layer, the judgment said.

What is the Presidential list?

  • The Constitution, while providing for special treatment of SCs and STs to achieve equality, does not specify the castes and tribes that are to be called SCs and STs.
  • This power is left to the central executive — the President. As per Article 341, those castes notified by the President are called SCs and STs.
  • A caste notified as SC in one state may not be an SC in another state. These vary from state to state to prevent disputes as to whether a particular caste is accorded reservation or not.
  • According to the annual report of the Ministry of Social Justice and Empowerment, there were 1,263 SCs in the country in 2018-19.
  • No community has been specified as SC in Arunachal Pradesh and Nagaland, and Andaman & Nicobar Islands and Lakshadweep.
  • The Constitution treats all Schedule Castes as a single homogeneous group.

Arguments against sub-categorisation

  • The argument is that the test or requirement of social and educational backwardness cannot be applied to SCs and STs.
  • The special treatment is given to the SCs due to untouchability with which they suffer.
  • In a 1976 case, State of Kerala v N M Thomas, the Supreme Court laid down that “Scheduled Castes are not castes, they are class.”
  • The petitioner’s argument against allowing states to change the proportion of reservation is also based on the perception that such decisions will be made to appease one vote-bank or the other.
  • A watertight President’s list was envisaged to protect from such potential arbitrary change.

Way ahead with the Judgement

  • The judgement reasoned that sub-classifications within the Presidential/Central List do not amount to “tinkering” with it.
  • No caste is excluded from the list. The States only give preference to weakest of the lot in a pragmatic manner based on statistical data.
  • Preferential treatment to ensure even distribution of reservation benefits to the more backward is a facet of the right to equality, judgement observed.

Also read:

[Burning Issue] SC judgement on Reservation not being a Fundamental Right