April 2021
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e-Commerce: The New Boom

E-commerce policy is needed for speedy, inclusive growth

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Significance of e-commerce sector for India

The article highlights the untapped potential of the e-commerce sector in the transformation of the Indian economy and suggests factors to take into account in the new e-commerce policy.

How pandemic contributed to the growth of e-commerce

  • A celebrated McKinsey study has revealed that we have covered a ‘decade in days’ in the adoption of digital during the pandemic.
  • Behavioural changes have been witnessed in most areas like work, learning, health, travel, entertainment, etc.
  • But the biggest surge has been in e-commerce, both in goods and services.

Significance of the sector for India

  • E-commerce is one of India’s fastest-growing sectors, for attracting FDI and creating jobs, and providing a pan-India market for lakhs of SMEs, and facilitating exports.
  • India has a vibrant retail sector, bubbling with energy and a bright future.
  • E-commerce can rope in lakhs of MSMEs in cross-border trade and multiply turnover and revenues enormously.
  • Its role in facilitation of exports with linkages and access to overseas markets can also help inject competitiveness in our products and creating a lot of jobs and market opportunities, adding to inclusive growth.

Issues faced by the sector

  • The digital interface during e-commerce processes with multiple agencies has resulted in a plethora of compliances.
  • These compliances include Income Tax Act 1961, Information Technology Act 2000, Consumer Protection Act 2019, FEMA Act 2000, Competition Act 2002, Companies Act 2013, Anti-Piracy Law, GSTN, DGFT, etc.
  • In addition, handling, generation and protection of humongous data is a major issue under data protection laws.
  • At times, there are requirements of compliances with various local and state laws, and during exports, adherence to foreign laws, many of which could be quite complex and rigorous.

E-commerce policy to aid Inclusive growth

  • Inclusive growth being an important objective of the proposed e-commerce/FDI policy, it should recognise and support new business models in both product and service segments.
  • The policy should be aimed at improving consumer experience and providing gainful employment to regular and gig workers with improved earnings.
  • India, in fact, is the first country to extend protections to workers including the new-age gig and platform workers, which is being viewed with interest globally.
  • With the passage of the Code on Social Security 2020, policymakers have focused on financial and social security associated with employment to contemporary socio-economic realities.
  • The role of platform workers amidst the pandemic has presented a strong case to attribute a more robust responsibility to platform aggregator companies and the State.
  • This has cemented their role as public infrastructures who also sustain demand-driven aggregators and e-commerce platforms.
  • This role of the platform workers may help in higher productivity and more sustainable employment, when many of them could potentially become mini-entrepreneurs.
  • This, however, would need to be facilitated by concerned public and private institutions as also the multiple regulators in the e-commerce ecosystem.
  • In an online services market place and to provide full support to regular and gig professionals rendering services on the platform, it must be imperative on the service platform to build their capacity through training, technology and access to high-quality consumables and tools.

Consider the question “Examine the role e-commerce can play in India’s pursuit of inclusive growth? What are the issues faced by the sector in India?” 

Conclusion

We are in for exciting times, as we enter this decade, rightly called the ‘Techade’; 2020 has accelerated technology infusion in all segments of life and activity. The world is looking at India with expectations and we owe it to our nation.


Source: https://www.financialexpress.com/opinion/e-commerce-policy-needed-for-speedy-inclusive-growth/2226729/

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Goods and Services Tax (GST)

Should Petroleum be brought within the ambit of GST?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: GST

Mains level: Paper 3- Inclusion of petrol and diesel in GST

The article deals with the issues of demand for the inclusion of fuel oils in the GST regime and its implications for the revenue of the states and the Centre.

How much tax we pay on petrol and diesel

  • The Union and state levies put together account for roughly 55 per cent and 52 per cent of the retail price of petrol and diesel respectively.
  • These work out to around 135 per cent and 116 per cent of the base prices of the two products respectively.
  • The central levy on petrol and diesel works out to around 36 per cent of the retail price while the state component is around 20 per cent (diesel) to 28 per cent (petrol).
  • Of the total central levies on petrol and diesel, Rs 1.40 per litre and Rs 1.80 per litre is the basic excise duty for the two fuels, and Rs 11 per litre and Rs 18 per litre is the special additional excise duty.
  • Both these components form part of the divisible pool of taxes i.e. 42 per cent of which (approximately Rs 52,000 crore) goes to the states.
  • The remaining portion of Rs 18 per litre in both cases is the Road and Infrastructure Cess and Rs 2.50 per litre and Rs 4 per litre is the Agriculture Infrastructure and Development Cess which are retained by the Centre.

How other countries tax fuel oils

  • Being demerit goods, fuel oils and liquor are almost universally subject to a dual levy by countries that implement any kind of VAT or GST.
  • The levy is a mix of GST at a fixed percentage of the price which qualifies for credit in the value chain and a fixed amount or percentage of the price which is not creditable and is thus outside GST.
  • Punitive taxes of this order are levied primarily to discourage consumption of environmentally degrading fossil fuels and to garner revenues to fund infrastructure, while the creditable component enables offsetting of taxes on basically capital inputs.
  • These products are subjected to a plethora of levies like VAT, excise duty, storage levies, security levies and environmental taxes in the EU and the total incidence of such taxes ranges from around 45 per cent to 60 per cent.
  • The US is an exception in these matters since it imposes taxes at rates as low as around 15 per cent.

Including fuel oils in the GST regime

  • the 122nd Constitution Amendment Bill in 2014 for GST adopted the delayed choice approach.
  • Under the delayed-choice approach, petroleum products would be subjected to GST with effect from such date as the council may recommend.
  • Accordingly, sections 9(2) and 5(2) of the CGST/SGST Act and the IGST Act respectively, explicitly provide for levy of GST on these products with effect from such date as the Council may recommend.
  • Thus, bringing the aforesaid petro-products under GST is not within the reach of the central government alone.

How much will be the loss of revenue

  • A 28 per cent levy of GST on the base price would fetch around Rs 5.40 per litre on petrol and around Rs 5.45 on diesel to the central and each of the state governments.
  • Contrast the above with the current yield of Rs 32.90 per litre on petrol and Rs 31.80 per litre on diesel to the Centre alone and an average of around Rs 20 per litre and Rs 15 per litre on petrol and diesel, respectively, to each of the states.
  • This, however, would bring down the prices of petrol and diesel to around Rs 55 per litre.
  • This would translate into a revenue loss of around Rs 3 lakh crore on account of petrol and around Rs 1.1 lakh crore on account of diesel to the Centre and the states, at current volumes.

Consider the question “What are the various levies contributing to the prices of petrol and diesel in India? Examine the rationale for the heavy taxing of these products in India.”

Conclusion

Clearly, bringing petro-products under GST would not lower fuel oil prices by itself, unless the Union and the state governments are willing to take deep cuts in their revenues.

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Forest Fires

Why forest fires break out in the spring?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not Much

Mains level: Forest fires and their prevention

Uttarakhand has witnessed over 1,000 incidents of a forest fire over the last six months, including 45 in the last 24 hours alone.

Forest fires this year

  • Since the start of 2021, there has been a series of forest fires in the Himachal Pradesh, Nagaland-Manipur border, Odisha, Madhya Pradesh, and Gujarat, including in wildlife sanctuaries.
  • April-May is the season when forest fires take place in various parts of the country.
  • But forest fires have been more frequent than usual in Uttarakhand and have also taken place during winter; dry soil caused by a weak monsoon is being seen as one of the causes.

As of 2019, about 21.67% of the country’s geographical area is identified as forest, according to the India State of Forest Report 2019 (ISFR) released by the Forest Survey of India (FSI).  Tree cover makes up another 2.89% (95, 027 sq km).

How vulnerable are forests in Uttarakhand?

  • Uttarakhand and Himachal Pradesh are the two states that witness the most frequent forest fires annually.
  • In Uttarakhand, 24,303 sq km (over 45 per cent of the geographical area) is under forest cover.

What causes forest fires?

  • Forest fires can be caused by a number of natural causes, but officials say many major fires in India are triggered mainly by human activities.
  • Emerging studies link climate change to rising instances of fires globally, especially the massive fires of the Amazon forests in Brazil and in Australia in the last two years.
  • Fires of longer duration, increasing intensity, higher frequency and highly inflammable nature are all being linked to climate change.
  • In India, forest fires are most commonly reported during March and April, when the ground has large quantities of dry wood, logs, dead leaves, stumps, dry grass and weeds that can make forests easily go up in flames if there is a trigger.
  • Under natural circumstances, extreme heat and dryness, friction created by rubbing of branches with each other also have been known to initiate fire.

Why Uttarakhand?

  • In Uttarakhand, the lack of soil moisture too is being seen as a key factor. In two consecutive monsoon seasons (2019 and 2020), rainfall has been deficient by 18% and 20% of the seasonal average, respectively.
  • But, forest officials say most fires are man-made, sometimes even deliberately caused.
  • Even a small spark from a cigarette butt, or a carelessly discarded lit matchstick can set the fire going.
  • For example, in Odisha, which saw a major fire last month in Simlipal forest, villagers are known to set dry leaves to fire in order to collect mahua flowers, which go into preparation of a local drink.

Why are forest fires difficult to control?

  • The locality of the forest and access to it pose hurdles in initiating firefighting efforts.
  • During peak season, shortage of staff is another challenge in dispatching firefighting teams.
  • Timely mobilization of forest staff, fuel and equipment, depending on the type of fire, through the thick forests, remain challenges.
  • As it is impossible to transport heavy vehicles loaded with water into the thick forests, a majority of fire dousing is initiated manually, using blowers and similar devices.
  • But there have been incidents when forest fires were brought under control using helicopter services.
  • Wind speed and direction play a critical role in bringing a forest fire under control. The fire often spreads in the direction of the winds and towards higher elevations.

What factors make forest fires a concern?

Forests play an important role in mitigation and adaptation to climate change.

  • Carbon emission: They act as a sink, reservoir and source of carbon.
  • Livelihood loss: In India, with 1.70 lakh villages in close proximity to forests (Census 2011), the livelihood of several crores of people is dependent on fuelwood, bamboo, fodder, and small timber.
  • Destruction of animals’ habitat: Heat generated during the fire destroys animal habitats. Soil quality decreases with the alteration in their compositions.
  • Soil degradation: Soil moisture and fertility, too, is affected. Thus forests can shrink in size. The trees that survive fire often remain stunted and growth is severely affected.

Various efforts taken

  • Since 2004, the FSI developed the Forest Fire Alert System to monitor forest fires in real-time.
  • In its advanced version launched in January 2019, the system now uses satellite information gathered from NASA and ISRO.
  • Real-time fire information from identified fire hotspots is gathered using MODIS sensors (1km by 1km grid) and electronically transmitted to FSI.
  • This information is then relayed via email at state, district, circle, division, range, beat levels. Users of this system in the locality are issued SMS alerts.

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Monsoon Updates

How Asian desert dust enhances Indian summer monsoon?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Indian Monsson : Onset and Withdrawal

Mains level: Determinants of Indian Monsoon

A new study has revealed how dust coming from the deserts in West, Central and East Asia plays an important role in the Indian Summer Monsoon.

Try this PYQ:

With reference to ‘Indian Ocean Dipole (IOD)’, sometimes mentioned in the news while forecasting Indian monsoon, which of the following statements is/are correct?

  1. IOD phenomenon is characterized by a difference in sea surface temperature between tropical Western Indian Ocean and tropical Eastern Pacific Ocean.
  2. An IOD phenomenon can influence an El Nino’s impact on the monsoon.

Select the correct Option using the code given below:

(a) Only 1

(b) Only 2

(c) Both 1 and 2

(d) Neither 1 nor 2

Why study dust?

  • Many studies have shown that the dust emission scheme is extremely sensitive to climate change.
  • Understanding these mechanisms and effects of dust will help us understand our monsoon systems in the face of global climate change.

Impact of dust on Indian Monsoon

  • Dust swarms from the desert when lifted by strong winds can absorb solar radiation and become hot.
  • This can cause heating of the atmosphere, change the air pressure, wind circulation patterns, influence moisture transport and increase precipitation and rainfall.
  • A strong monsoon can also transport air to West Asia and again pick up a lot of dust.
  • The researchers say this is a positive feedback loop.

Role of the Iranian plateau

  • Not just the dust from the Middle East, the Iranian Plateau also influences the Indian Summer Monsoon.
  • The hot air over the Iranian Plateau can heat the atmosphere over the plateau, strengthen the circulation over the deserts of the Arabian Peninsula and increase dust emission from the Middle East.
  • The researchers also explain how the Indian Summer Monsoon has a reverse effect and can increase the winds in West Asia to produce yet more dust.

Transported aerosols

  • Deserts across the globe play important roles in monsoons.
  • The dust aerosols from deserts in West China such as the Taklamakan desert and the Gobi Desert can be transported eastward to eastern China and can influence the East Asia summer monsoon.
  • And in the southwest United States, we have some small deserts that influence the North African monsoon.

Anthropogenic contributions

  • Some studies have found that the anthropogenic aerosols emitted from the Indian subcontinent can decrease summer monsoon precipitation.
  • However, some others found that absorbing aerosols such as dust can strengthen the monsoon circulation.

Minor components

  • Earlier it was believed that dust from deserts across the globe will have the same components.
  • But it was found that different deserts have different chemical compositions and this can influence the dust’s properties.
  • For example, dust from the Middle East has the more absorbing ability of solar radiation than dust from North Africa and this difference in absorbing ability might influence monsoon systems.

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Monetary Policy Committee Notifications

Maintaining the inflation target at 4%

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Inflation

Mains level: Inflation management

On the last day of the financial year 2020-21, the Finance Ministry announced that the inflation target for the five years between April 2021 and March 2026 will remain unchanged at 4% (+/-2 %).

Inflation targeting in India

  • India had switched to an inflation target-based monetary policy framework in 2015, with the 4% target kicking in from 2016-17.
  • Many developed countries had adopted an inflation-rate focus as an anchor for policy formulation for interest rates rather than past fixations with metrics like the currency exchange rate or controlling money supply growth.
  • Emerging economies have also been gradually adopting this approach.

Try this PYQ:

Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?

(a) Curbing imports of non-essential goods and promoting exports

(b) Encouraging Indian borrowers to issue rupee denominated Masala Bonds

(c) Easing conditions relating to external commercial borrowing

(d) Following an expansionary monetary policy

What is the rate of consumer price inflation?

  • Moody’s Analytics recently pointed out that volatile food prices and rising oil prices had already driven India’s consumer price index (CPI)-based inflation past the 6% tolerance threshold several times in 2020.
  • While inflation headwinds remain, especially with oil prices staying high, there was some speculation that the Central government may ease up on the inflation target by a percentage point or two.
  • This would have given the Reserve Bank of India (RBI) more room to cut interest rates even if inflation was a tad higher.

What is the RBI’s position on this?

  • The RBI had, in recent months, sought a continuance of the 4% target with the flexible tolerance limits of 2%.
  • The 6% upper limit, it argued, is consistent with global experience in countries that have a large share of food items in their consumer price inflation indices.
  • Accepting inflation levels beyond 6% would hurt the country’s growth prospects, the central bank had asserted.

Why should these concern consumers?

  • The central bank’s monetary policy and the government’s fiscal stance may not have necessarily reacted to arrest inflation pressures even if retail price rise trends would shoot past 6%.
  • As high oil prices spur retail inflation higher, the central bank is unhappy as its own credibility comes under a cloud if the target is breached.
  • If the upper threshold for the inflation target were raised to 7%, the central bank may not have felt the need to seek tax cuts (yet).
  • Thus, the inflation target makes the central bank a perennial champion for consumers vis-à-vis fiscal policies that, directly or indirectly, drive retail prices up.

Back2Basics:

Types of Inflation: Demand Pull, Cost Push, Stagflation, Structural Inflation, Deflation and Disinflation

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Satellites and Light Pollution

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Light pollution

Mains level: Light pollution and its ecological impact

Objects sent to space that orbit the Earth can increase the overall brightness of the night sky by 10 per cent above natural levels, showed a new study.

Light Pollution

  • Light pollution is the presence of anthropogenic and artificial light in the night environment.
  • It is exacerbated by excessive, misdirected or obtrusive use of light, but even carefully used light fundamentally alters natural conditions.
  • Specific categories of light pollution include light trespass, over-illumination, glare, light clutter, and skyglow.
  • A single offending light source often falls into more than one of these categories.

How does a satellite contribute?

  • Large fleets of communication satellites that have been unleashed in space not just add to the light pollution but also collide and form more debris.
  • Light from this piling debris cloaks astronomical bodies like ‘the glowing clouds of stars in the Milky Way’ from human sight.
  • While telescopes and sensitive cameras often resolve space objects as discrete points of light, low-resolution detectors of light such as the human eye see only the combined effect of many such objects.
  • Astronomers have complained that the growing number of artificial space objects choke the sky and disturb observations.

Impacts of light pollution

  • As a major side-effect of urbanization, it is blamed for compromising health, disrupting ecosystems and spoiling aesthetic environments.
  • Health effects of over-illumination or improper spectral composition of light may include increased headache, worker fatigue, medically defined stress and an increase in anxiety.
  • Likewise, animal models have been studied demonstrating unavoidable light to produce adverse effect on mood and anxiety.
  • For those who need to be awake at night, the light at night also has an acute effect on alertness and mood.

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J&K – The issues around the state

Places in news: Chenab Arch Bridge

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Chenab Arch Bridge

Mains level: Not Much

A half-a-kilometre long arch, the defining feature of the world’s highest railway bridge over river Chenab, is set to be completed today.

Chenab Arch Bridge

  • The bridge is part of an ambitious 272-km rail link project and is being constructed by the Northern Railway at an estimated cost of ₹28,000 crores.
  • The bridge will be able to withstand earthquakes with a magnitude of up to eight and high-intensity blasts.
  • The bridge, which will include a 14-metre dual carriageway and a 1.2-metre-wide central verge, will have a design speed of around 100 kilometres per hour with a lifespan of 120 years.

Its inception

  • The preparations of the rail link began in 2002 and the initial plan was to connect Kashmir’s northernmost city Baramulla to New Delhi.
  • Work on the bridge started again in July 2017 with the aim of completing the construction by the end of 2019 but due to contractual issues in 2018, it was delayed.
  • Steel was specifically chosen for the construction of the bridge as it will make the project more economical.
  • The metal will also be able to resist temperatures of minus 20 degree Celsius and wind speeds of above 200 kilometres per hour.

Significance

  • A railway bridge like this, with this kind of geography, has not been made anywhere in the world, according to the Railways.
  • It will symbolise the Kashmir rail link, to be ready for at least a century.
  • In other words, a train from Kanyakumari can reach all the way to Kashmir uninterrupted.
  • The cable crane that will do the job of completing the arch itself measures around 900 meters and is said to be the longest in the world, made especially for this project.

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