Note4Students
From UPSC perspective, the following things are important :
Prelims level: GST collection
Mains level: Paper 3- Increased GST collection
Context
There has been a remarkable upswing in GST collections in recent months. Collections touched a record high of Rs 1.67 lakh crore in April.
GST
What are the reasons for increased collection?
- 1] Inflation: First, the sharp rise in inflation has played a significant role.
- Notwithstanding concerns over the unevenness of the economic recovery, in nominal terms, the economy grew by 19.4 per cent in 2021-22 as per the second advance estimates.
- Deflating GST collection suggests that a large part of the recent increase in collections is driven by rising prices.
- 2] Higher imports: Part of the overall increase in collections can be traced to higher imports.
- Higher buoyancy: Even if one is to exclude the revenue accruing from imports, the rise in GST collections has outstripped GDP growth, indicating higher buoyancy.
- 3] Tightening of the rules: In order to improve compliance levels, the GST Council has been tweaking the rules to tighten the system.
- Returns filed have gone up, while the number of non-filers and those who delay filing have fallen.
- Alongside, the administration has also taken steps to tackle the menace of fake invoices by placing restrictions on the quantum of input tax credit that can be used to pay of tax obligations.
- The introduction of e-invoicing has also played a role.
- Until recently, this was being implemented for firms with a turnover of more than Rs 50 crore.
- From April, this process has been extended to firms above Rs 20 crore.
- The incremental gains from bringing smaller firms into its ambit, while consequential, are unlikely to be of the same order.
- 4] Industrial activity: The higher collections in April 2022 seem to be led by increase in industrial activity. This is borne by strong growth in collections in states such as Maharashtra, Karnataka and Odisha which house lot of industries. Relatively tepid growth in more populous states such as Bihar (-2.47 per cent), West Bengal (7.80 per cent) and Jharkhand (4.86 per cent) shows that the GST collections was not propelled by revival in private consumption.
- The real challenge lies in improving compliance levels across the entire spectrum of industries where inputs/raw materials are sourced largely from the informal sector.
- 5] Changing the structure of the economy: The formalisation of firms, the growing concentration of economic power in the hands of a few, imply that for the same level of output, the tax paid will be higher.
Suggestion
- Increase tax rate: Around two-fifths of the taxable value (or turnover) falls under the 18 per cent slab as per research by some analysts.
- This implies that simply merging the 12 per cent and the 18 per cent slab as some have been suggesting would lead to a revenue loss.
- Before opting for such adjustments, the GST Council must first ascertain the potential revenue (net of cess and refunds) at varying levels of compliance, tax rates and exemptions afforded.
- Now, as per some estimates presented to the 15th Finance Commission, with existing exemptions in place, the current tax regime should ideally yield revenues equivalent to 8.23 per cent of GDP.
- In another scenario, even if existing exemptions are kept in place, and if a single rate of 14 per cent is levied, then collections should rise to 8.93 per cent.
Conclusion
Considering the current economic situation, now may not be an opportune moment to raise taxes. But there is no getting around it. Both the Centre and the states need to work towards this.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Plight of the sex workers in India
In a significant order recognising sex work as a “profession”, the Supreme Court has directed that police should neither interfere nor take criminal action against adult and consenting sex workers.
What did the Supreme Court say?
- Sex Work is a profession whose practitioners are entitled to dignity and equal protection under law.
- Criminal law must apply equally in all cases, on the basis of ‘age’ and ‘consent’.
- It need not be gainsaid that notwithstanding the profession, every individual in this country has a right to a dignified life under Article 21 of the Constitution, the court observed.
- The order was passed after invoking special powers under Article 142 of Constitution.
A caution to the police
- It is clear that the sex worker is an adult and is participating with consent, the police must refrain from interfering or taking any criminal action.
- The Bench ordered that sex workers should not be “arrested or penalised or harassed or victimised” whenever there is a raid on any brothel.
- Since voluntary sex work is not illegal and only running the brothel is unlawful.
- Basic protection of human decency and dignity extends to sex workers and their children, the court noted.
- A child of a sex worker should not be separated from the mother merely on the ground that she is in the sex trade, the court held.
- Further, if a minor is found living in a brothel or with sex workers, it should not be presumed that the child was trafficked.
Sexual crimes against sex workers
- The court ordered the police to not discriminate against sex workers who lodge a criminal complaint of offence committed against them is of a sexual nature.
- Sex workers can also be victims of sexual assault should be provided every facility including immediate medico-legal care.
- The court said media should take “utmost care not to reveal the identities of sex workers, during arrest, raid and rescue operations.
Sex work in India
- According to the Indian Penal Code (IPC), prostitution in its broader sense is not really illegal per se.
- But there are certain activities which constitute a major part of prostitution that are punishable under certain provisions of the act, which are:
- Soliciting prostitution services in public places
- Carrying out prostitution activities in hotels
- Indulging in prostitution by arranging for a sex worker
- Arrangement of a sexual act with a customer
Various issues faced by Sex Workers
- Stigma and Marginalization: This is experienced as the major factor that prevents women in sex work from accessing their rights.
- Denial of basic amenities: Due to this discrimination, women in sex work have been denied safety, proper healthcare, education and, most importantly, the right to practice the business of making money from sex.
- Risks of violence: People in sex work are not only at a higher risk for violence, but they are also less likely to get protection from the police—often the very perpetrators of this violence.
- Backwardness: Illiteracy, ignorance and fear of the medical establishment make it difficult for women to access healthcare.
- Health hazards: Current discourse on HIV/AIDS has served to further stigmatize sex workers by labeling them as “vectors” and “carriers” of the disease.
Protection against forceful sex work
- The Immoral Traffic (Prevention) Act, 1986 is an amendment of the original act.
- As per this act, prostitutes are to be arrested if they are found soliciting their services or seducing others.
- Furthermore, call girls are prohibited from making their phone numbers public.
- They can be punished for up to 6 months along with penalties if found doing so.
Constitutional protection
Article 23 of the Indian Constitution, amended in 2014, includes the following provisions:
- Prohibition of human trafficking and forced labour.
- Traffic in human beings and bears and other similar forms of forced labour are prohibited and any contravention of this provision shall be an offence punishable in accordance with the law.
- Nothing in this article precludes the State from imposing compulsory service for public purposes, and the State shall not discriminate solely on the basis of religion, race, caste, or class, or any combination thereof, in imposing such service.
So, where does India stand?
- Prostitution is not illegal in our country, but soliciting and public prostitution are.
- Owning a brothel is also illegal, but because places like GB Road are already in place, these laws are rarely enforced.
What will change in India if the Centre accepts the court’s direction?
- Sex workers will be accorded equal legal protection.
- If a sex worker reports a criminal/sexual or other type of offence, the police will take it seriously and act in accordance with the law.
- If a brothel is raided, the sex workers involved will not be arrested, penalised, harassed, or victimised.
- Any sex worker who is a victim of sexual assault will be given all of the same services as a survivor of sexual assault, including immediate medical attention.
- Police will be required to treat all sex workers with dignity and not verbally or physically abuse them, subject them to violence, or coerce them into any sexual activity.
Where do other countries stand?
Some countries choose to outright ban the practice, while others have attempted to regulate prostitution and provide health and social benefits to sex workers.
Here are a few examples of countries where prostitution is legal:
- New Zealand: Prostitution has been legal since 2003. There are even licenced brothels operating under public health and employment laws, and they get all the social benefits.
- France: Prostitution is legal in France, though soliciting in public is still not allowed.
- Germany: Prostitution is legalised and there are proper state-run brothels. The workers are provided with health insurance, have to pay taxes, and they even receive social benefits like pensions.
- Greece: The sex workers get equal rights and have to go for health checkups as well.
- Canada: Prostitution in Canada is legal with strict regulations.
Conclusion
- While sex worker collectives have shown tremendous progress in asserting the rights of sex workers across India, they face an uphill battle as the country continues to foster a globalized economy.
- In the globalized world, sex work will become more institutionalized, functioning through escort services, and will no longer need traditional street brothels.
- Legislators needs to ensure all rights to the sex workers at par with citizens.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: RTI Act
Mains level: Exemptions to the RTI
Veterans of the Indian Armed Forces have urged PM against exempting defense services from purview of RTI (Right to Information) Act, 2005.
Why in news?
- Last year, late CDS Rawat had urged the government making a pitch for defence services to be exempted from the RTI Act.
- He had stated that none of the Central Armed Police Forces (CAPF) are under its purview and defence services, being even more sensitive, should be fully exempted too.
What is RTI?
- RTI is an act of the parliament which sets out the rules and procedures regarding citizens’ right to information.
- It replaced the former Freedom of Information Act, 2002.
- Under the provisions of RTI Act, any citizen of India may request information from a “public authority” (a body of Government or “instrumentality of State”) which is required to reply expeditiously or within 30.
- In case of the matter involving a petitioner’s life and liberty, the information has to be provided within 48 hours.
- The Act also requires every public authority to computerize their records for wide dissemination and to proactively publish certain categories of information so that the citizens need minimum recourse to request for information formally.
Constitutional status of RTI
- Since RTI, is implicit in the Right to Freedom of Speech and Expression under Article 19 of the Indian Constitution, it is an implied FR.
- These are backed by the right to constitutional remedies that is, the right to approach the supreme court and high court under Article 32 and 226 respectively in case of infringement of any of FRs.
Benefits of RTI
- Greater accessibility of information: A person can seek information from any public authority in the form of copies, floppy disks, sample material etc under RTI.
- Efficient governance: RTI Act helps us in knowing the efficiency of the government’s functioning.
- Citizen’s participation: Information under RTI can be sought easily by requesting the public officer and assistant public officer in any public authority.
- Government obligation: Obtaining information from any public authority is obligatory for them.
- Maintenance of public record: Under RTI Act, it is the duty of public authorities to maintain records for easy access and to publish within 120 days the name of the particular officers who should give the information and in regard to the framing of the rules, regulations etc.
- Empowerment of Citizens: Every citizen has been empowered to be informed about anything that affects their life directly or indirectly.
Why do Veterans want RTI?
- The RTI has remained a powerful tool with the veterans and serving community to obtain information and documents concerning their service and pensioner issues.
- RTI Act has ensured maximum transparency in official establishments dealing with such cases.
- Even innocuous documents such as medical board proceedings concerning disabled soldiers and old service records of veterans are only made available through the RTI Act.
- Requesting that defence services are not be placed in Schedule 2 of the RTI Act, 2005, the lobby said that adequate protection is already available in Sections 8 and 9 of the Act.
- Armed forces can hold back information related to operational and security-related issues.
Necessity for RTI in armed forces
- Any such move will be a blow to transparency and will lead to an exponential increase in litigation and grievances.
- And any irregularities in defence procurements would also go under the carpet, besides massive discrepancies in promotions.
- Already they are so opaque and have faced so many strictures by the courts.
- Denying such a right of a powerful public-oriented tool to military personnel, veterans, military widows and their families would place them at a sharp disadvantage compared to citizens.
- This would also result in litigation blast with affected persons approaching judicial forums for minor issues.
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From UPSC perspective, the following things are important :
Prelims level: Green Hydrogen
Mains level: National Hydrogen Mission
India aspires to emerge as the leader of green hydrogen by taking advantage of the current energy crisis across the globe.
Why in news?
- Oil India Limited (OIL) has commissioned India’s first 99.99% pure green hydrogen plant in eastern Assam’s Jorhat.
- Powered by a 500 KW solar plant, the green hydrogen unit has an installed capacity to produce 10 kg of hydrogen per day and scale it up to 30 kg per day.
What is Hydrogen?
- Hydrogen is the lightest, simplest and most abundant member of the family of chemical elements in the universe.
- It is colourless, odourless, tasteless, non-toxic and highly combustible gaseous substance.
What is Green hydrogen?
- Green hydrogen is the one produced with no harmful greenhouse gas emissions.
- It is made by using clean electricity from surplus renewable energy sources, such as solar or wind power, to electrolyse water.
- Electrolysers use an electrochemical reaction to split water into its components of hydrogen and oxygen, emitting zero-carbon dioxide in the process.
- Green hydrogen currently makes up a small percentage of the overall hydrogen, because production is expensive.
Why is India pursuing green hydrogen?
- Under the Paris Agreement of 2015, India is committed to reducing its greenhouse gas emissions by 33-35% from the 2005 levels.
- It is a legally binding international treaty on climate change with the goal of limiting global warming to below 2°C compared to pre-industrial levels.
- At the 2021 CoP in Glasgow, India reiterated its commitment to move from a fossil and import-dependent economy to a net-zero economy by 2070.
- India’s average annual energy import bill is more than $100 billion .
- The increased consumption of fossil fuel has made the country a high CO2 emitter which accounts for nearly 7% of the global CO2 burden.
Various policy moves
- In order to become energy independent by 2047, the government stressed the need to introduce green hydrogen as an alternative fuel that can make India the global hub and a major exporter of hydrogen.
- The National Hydrogen Mission was launched on August 15, 2021, with a view to cutting down carbon emissions and increasing the use of renewable sources of energy.
How much green hydrogen is India producing?
- India has just begun to generate green hydrogen with the objective of raising non-fossil energy capacity to 500 gigawatts by 2030.
- It was on April 20, 2022 that the public sector OIL, which is headquartered in eastern Assam’s Duliajan, set up India’s first 99.99% pure green hydrogen pilot plant.
- Research and development efforts are ongoing for a reduction in the cost of production, storage and the transportation of hydrogen.
What are the advantages of hydrogen as a fuel?
- Hydrogen can be used to produce electricity using fuel cells.
- Hydrogen, thus, can act as an energy storage device and contribute to grid stability.
- The oxygen, produced as a by-product (8 kg of oxygen is produced per 1 kg of hydrogen), can also be monetised by using it for industrial and medical applications or for enriching the environment.
Limitations to Hydrogen
- Despite being the most abundant element in the Universe, hydrogen does not exist on its own so needs to be extracted from water via electrolysis or separated from carbon fossil fuels.
- Hydrogen fuel cells need huge investment to be developed to the point where they become a genuinely viable energy source.
- This will also require the political will to invest the time and money into development in order to improve and mature the technology.
- Precious metals such as platinum and iridium are typically required as catalysts in fuel cells meaning unfeasibly high cost.
- There are also barriers around regulatory issues concerning the framework that defines commercial deployment models.
- Storage and transportation of hydrogen is more complex than that required for fossil fuels due to its high inflammability.
Back2Basics: Colours spectrum of Hydrogen
(1) Green hydrogen
(2) Blue hydrogen
- It is produced mainly from natural gas, using a process called steam reforming, which brings together natural gas and heated water in the form of steam.
- The output is hydrogen – but also carbon dioxide as a by-product.
- That means carbon capture and storage (CCS) is essential to trap and store this carbon.
- Blue hydrogen is sometimes described as ‘low-carbon hydrogen’ as the steam reforming process doesn’t actually avoid the creation of greenhouse gases.
(3) Grey hydrogen
- Currently, this is the most common form of hydrogen production.
- Grey hydrogen is created from natural gas, or methane, using steam methane reformation but without capturing the greenhouse gases made in the process.
(4) Black and brown hydrogen
- Any hydrogen made from fossil fuels through the process of ‘gasification’ is sometimes called black or brown hydrogen interchangeably.
- They are the most environmentally damaging.
(5) Pink hydrogen
- Pink hydrogen is generated through electrolysis powered by nuclear energy.
- Nuclear-produced hydrogen can also be referred to as purple hydrogen or red hydrogen.
- In addition, the very high temperatures from nuclear reactors could be used in other hydrogen productions by producing steam for more efficient electrolysis or fossil gas-based steam methane reforming.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Semiconductor industry
CEOs of AMD, Nvidia and Intel have said at different forums last year that the chip situation will remain tight for the rest of 2022.
Genesis of shortage
- After reaching its peak in 2011, the laptop market growth slowed down with the rise of alternatives such as smartphones and tablets.
- Then, the pandemic hit.
- People switched to work from home, children connected to schools through laptops, and get-togethers happened over video calls.
- This shift led to a surge in demand for laptops and tablets.
- The stay-at-home rules also made several people pick up console-based learning and gaming.
- Each of these devices were in high demand and are run on thumbnail-sized semiconductors, performing various functions on a single device.
Also read:
[Sansad TV] Perspective: Semiconductor Industry & India
What led to the production anomaly?
- Manufacturers produce them as 200mm or 300mm wafers. These are further split into lots of tiny chips.
- While the larger wafers are expensive and mostly used for advanced equipment, the devices that were in high demand needed smaller diameter wafers.
- But the manufacturing equipment needed to make them were in short supply even before the pandemic began.
- Industry is moving in the direction of 5G and advanced communication, which requires expensive wafers.
- High consumer demand for low-end products, coupled with large orders from tech firms chocked chip makers whose factories were also closed during lockdowns.
- As the industry gradually tried to pull itself out of the supply crunch, and logistical complexities have exacerbated the problem.
Impact of Ukrainian War
- Separately, Russia’s invasion of Ukraine has strained exports of essential commodities used to make chip sets.
- Moscow supplies rare materials like palladium, and Kyiv sells rare gases to make semiconductor fab lasers.
- This combination is required to build chipsets that power a range of devices, from automobiles to smartphones.
Global supply chain
- About a decade and half back, semiconductors barely drew attention from large companies that have now come to rely on the thumbnail-sized semiconductor piece.
- During this period, firms developed a system to make chip sets.
- The system was made by interconnecting several parts of the world to make a single device.
- It is what we now call as the global supply chain.
How intricate is this network?
- Semiconductor manufacturing involves roughly 25 countries in the direct supply chain, and 23 countries in allied functions, according to a joint study by Global Semiconductor Alliance and Accenture.
- The report estimates a semiconductor-based product could cross international borders about 70 times before finally making it to the end customer.
- Wafer fabrication is the most globally dispersed, with 39 countries directly involved in the supply chain and 34 involved in allied activity.
- They provide services like photolithography, etching and cleaning.
- Designing happens across 12 countries; product testing and manufacturing each are done across 25 countries.
COVID is the only raison d’être
- Supply chain dynamics back fired due to the pandemic, and the recent geopolitical events.
- When the pandemic began, carmakers stopped requesting chips from suppliers due to low demand for new vehicles.
- And now, as they ramp up production to meet consumer demand, chip makers are down on supply because they have cut deals with other industries.
- As the geopolitical events in Central Europe and production shutdowns in China continue to add pressure to the already complicated semiconductor supply chain.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Places of Worship (Special Provisions) Act, 1991
Mains level: Paper 2- Lower judiciary
Context
The Supreme Court order of May 20, transferring the suit on the Gyanvapi Masjid dispute from the civil judge (senior division) Varanasi to the district judge casts aspersion, though unintended, on the competence of civil judges in general.
Background
- The matter had reached the Supreme Court on a petition filed by the Mosque Management Committee, which challenged the civil judge’s orders.
- The order permitted inspection, survey, and videography of the mosque’s complex to collect evidence about the alleged existence of idols of Hindu deities inside the mosque, which is adjacent to the Kashi Vishwanath Temple.
- The Mosque Management Committee had filed an application before the civil judge seeking the rejection of the plaint on the ground that it was barred by the Places of Worship (Special Provisions) Act, 1991.
- Places of Worship (Special Provisions) Act, 1991 prohibits individuals and groups of people from converting, in full or in part, a place of worship of any religious denomination into a place of worship of a different religious denomination, or even a different segment of the same religious denomination.
- It was argued before the SC that given the said Act, the suit was liable to be rejected at the threshold as the civil judge had no jurisdiction to entertain the same, much less to pass the aforesaid interim orders.
- The SC has not found any fault with the order of the civil judge, though there is also a view that it was mandatory on the part of the civil judge to have first passed an order on whether he had the jurisdiction to entertain the suit.
- However, it appears that in the SC’s view, this was not a serious infraction.
- So, in a way, the SC has affirmed the orders of the civil judge.
- The civil court had territorial and pecuniary jurisdiction to deal with the matter.
- The question that arises is: Why has the Supreme Court transferred the matter to the court of the district judge?
Issues with the SC transferring the case to the district judge
- The SC has seemingly declared civil judges to be not competent to decide a matter alleged to be complex.
- When the Civil Procedure Code, the High Court Rules and Orders invest a civil judge with jurisdiction, why take it away merely on the plea that the matter is complex?
- Unhealthy precedent: Fransfer of the case to the district judge has set an unhealthy precedent and will have a demoralising effect on the subordinate judiciary.
- In the recent past, many lower-level judicial officers have passed outstanding orders in matters concerning the liberties of the citizens, which are under threat as never before.
- The subordinate judiciary provides the foundation of our judicial system.
Conclusion
Supreme Court order inadvertently casts aspersions on competence of subordinate judiciary. District court should not be weighed down by SC observation.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Implications of Supreme Court's ruling for GST regime
Context
Last week, the Supreme Court ruled that the decisions taken by the GST Council are merely recommendations with “persuasive value” and are not binding.
GST as a advisory body
- The court has rejected the Centre’s contention that the entire structure of GST would crumble if the Council’s decisions were not treated as enforceable.
- In some ways, the verdict states the obvious.
- Article 246-A inserted after the 122nd constitutional amendment states, “Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every state, have the power to make laws with respect to the GST imposed by the Union or by such state.”
- Thus, the power to levy the central GST (CGST) vests with Parliament, the power to levy state GST (SGST) vests with state legislatures and Parliament has exclusive power to make laws with respect to the GST on items that are part of inter-state trade or commerce.
- Thus, the GST Council is only an advisory body and the actual decisions regarding model GST levies, principles of levy, apportionment of GST levied on inter-state supplies, principles relating to place of supply, exemptions and rate structure and any special provisions will have to be taken by either Parliament in the case of CGST and IGST or the states in the case of SGST.
- In effect, decisions on the structure and operation of the tax can be made by the Centre and individual states without discussion and deliberation in the Council and both can ignore any recommendation made by the Council.
- The judgment reiterates that the sovereign right to levy the tax still exists with the Union and state governments and it is for them to consider the recommendations of the Council.
- The chance of having a harmonised GST and reforms in the tax regime will crucially depend upon continued negotiation and bargaining between the Union and states.
- Intergovernmental cooperation has been kept alive to ensure a harmonised GST and unless both the Centre and the states see the gains, reforms will be hard to come by and if the Centre desires the reforms more than the states, it will have to ensure a “buy in” from the states to agree for the reform.
Implications of the judgement
- Given that the GST Council has been declared as only an advisory body with a persuasive value, what happens to the dream of having a harmonised one nation, one tax, if a state or a group of states decides to deviate?
- But the judgment paves the way for more intensive bargaining and negotiations, placing states on an equal footing with the Centre in taking decisions on the structure and operations of the tax.
- At present, decisions get approved in the GST Council when passed by a majority of three-fourths of the weighted votes of the members present and voting, with the Centre having one-third weight and individual states (and UTs) having an equal share of the remaining two-thirds weight.
- However, in the past, all decisions in the Council have been taken by consensus (except in the case of determining the rate on lotteries), and the Supreme Court decision reinforces this convention.
- The immediate impact of this will be bargaining by states for extending the period of compensation for the loss of revenue.
- As the five-year period of compensation gets over at the end of June, this decision will now help the states to bargain hard for the extension.
Way forward
- Though the period of collecting compensation cess has been extended till March 2026 to meet the interest and repayment requirements of the funds borrowed from the RBI to meet the compensation requirements, the lasting solution lies in increasing the revenue productivity of the tax by pruning the list of exempted items, rationalising the rates and taking administrative measures.
- These reforms will require strengthening the cooperative spirit.
Conclusion
This has come at a time when reforms have to be set in motion and hopefully, the Court’s decision will strengthen the cooperative spirit in reforming the domestic consumption tax system in the country.
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From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Taiwan as a new global flashpoint
The US President made a controversial statement on whether the US will come to the aid of Taiwan militarily in case of an invasion by China.
What is the Taiwan issue?
- Taiwan is an island territory located off the coast of mainland China, across the Taiwan Strait.
- After their defeat to the communist forces in the Chinese civil war (1945-1949), the ruling Kuomintang (Nationalist) government of China fled to Taiwan.
- They transplanted the Republic of China (ROC) government in Taiwan, while the Communist Party of China (CPC) established the People’s Republic of China (PRC) in the mainland.
- Since then, the PRC considers the island as a renegade province awaiting reunification by peaceful means, if possible.
Game changer: Cold war affiliations
- Meanwhile, the ROC retained its membership at the United Nations and its permanent seat at the UN Security Council (UNSC).
- The cross-strait relations became strained as a result of the Cold War, with the PRC allying itself with the Soviet Union (USSR) and ROC with the U.S.
- This resulted in the two Taiwan Strait crises of the 1950s.
The US and One-China Principle
- With the shifting geopolitics of the Cold War, the PRC and the U.S. were forced to come together in the 1970s to counter the growing influence of the USSR.
- This led to the US-China rapprochement demonstrated by the historic visit of then US President Richard Nixon to PRC in 1972.
- The same year, the PRC displaced ROC as the official representative of the Chinese nation at the UN.
- Diplomatic relations with the PRC became possible only if countries abided by its “One China Principle” — recognizing PRC and not the ROC as China.
Rise of Taiwan
- Taiwan transitioned from a single party state to a multi-party democracy.
- At the same time that China reformed its economic system under Deng Xiaoping, and by the end of the Cold War they became economically entangled.
- Nevertheless, they continue to compete for international recognition and preparing themselves for the worst possible scenario.
How has the US’s stance on the Taiwan question evolved vis-à-vis China?
- The very foundation of the US rapprochement as well as its recognition of the PRC is a mutual understanding on the Taiwan question.
- This has been outlined in three documents — the Shanghai Communique (1972), the Normalisation Communique (1979) and the 1982 Communique.
- According to the 1972 communique, the US agreed to the ‘one China principle’, with an understanding that it “acknowledges” and “does not challenge” that all Chinese on either side of the Taiwan Strait.
- It maintained that there is one China and Taiwan is a part of China.
- However, the US also established unofficial relations with Taiwan through this communique in the name of the people of both the countries.
Why is the issue significant today?
- As Taiwan’s democracy flourished, the popular mood drifted towards a new Taiwanese identity and a pro-independence stance on sovereignty.
- The past decade has seen considerable souring of ties across the Strait, as the Democratic People’s Party (DPP) became the most powerful political force in Taiwan.
- The DPP government has been catering to the pro-independence constituency in Taiwan and seeks to diversify economic relations away from China.
- China has always seen Taiwan as a territory with high geopolitical significance.
- This is due to its central location in the First Island Chain between Japan and the South China Sea, which is seen as the first benchmark or barrier for China’s power projection.
Why is China so obsessed with Taiwan?
- Taiwan is at China’s geostrategic calculus.
- Moreover, its reunification will formally bury the remaining ghosts of China’s “century of humiliation”.
- China under Xi Jinping seems to have lost its patience and currently sees very slim chances of a peaceful reunification.
- China usually makes aerial transgressions in Taiwan’s Air Defence Identification Zone (ADIZ).
- Also, this build-up of tensions is happening simultaneously and drawing parallels with the Russo-Ukrainian conflict.
Is US strategy towards Taiwan witnessing a major transformation?
- The US strategy towards Taiwan in light of the unresolved nature of the cross-Strait relations has been marked by what has been called “strategic ambiguity”.
- This is under the Taiwan Relations Act (TRA) of 1979.
- As per the TRA, the US has stated clearly that the establishment of bilateral relations with the PRC rests upon “the expectation that the future of Taiwan will be determined by peaceful means”.
- It also states the US policy to maintain the capacity to resist any resort to force or other forms of coercion that would jeopardise the security, or the social or economic system, of the people on Taiwan.
- Hence, there is no clear guarantee here that the US will militarily involve in a situation where China attempts to invade Taiwan, short of supplying “defensive weapons”.
Enjoying the ambiguity
- The US has for long utilized this strategic ambiguity with its own interpretation of the ‘one China principle to maintain its strategic interests in the Western Pacific.
- It is in this context that Mr. Biden’s statements have made controversy.
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From UPSC perspective, the following things are important :
Prelims level: Monkey Pox
Mains level: Rise in zoonotic diseases
With cases being reported from across the world, monkeypox has caught everyone’s attention.
What is Monkeypox?
- Monkeypox is not a new virus.
- The virus, belonging to the poxvirus family of viruses, was first identified in monkeys way back in 1958, and therefore the name.
- The first human case was described in 1970 from the Democratic Republic of Congo.
- Many sporadic outbreaks of animal to human as well as human to human transmission has occurred in Central and West Africa in the past with significant mortality.
- After the elimination of smallpox, monkeypox has become one of the dominant poxviruses in humans, with cases increasing over years along with a consequent reduction in the age-group affected.
How is it transmitted?
- Since the transmission occurs only with close contact, the outbreaks have been in many cases self-limiting.
- Since in the majority of affected people, the incubation period ranges from five to 21 days and is often mild or self-limiting, asymptomatic cases could transmit the disease unknowingly.
- The outbreaks in Central Africa are thought to have been contributed by close contact with animals in regions adjoining forests.
- While monkeys are possibly only incidental hosts, the reservoir is not known.
- It is believed that rodents and non-human primates could be potential reservoirs.
Does the virus mutate?
- Monkeypox virus is a DNA virus with a quite large genome of around 2,00,000 nucleotide bases.
- While being a DNA virus, the rate of mutations in the monkeypox virus is significantly lower (~1-2 mutations per year) compared to RNA viruses like SARS-CoV-2.
- The low rate of mutation therefore limits the wide application of genomic surveillance in providing detailed clues to the networks of transmission for monkeypox.
- A number of genome sequences in recent years from Africa and across the world suggest that there are two distinct clades of the virus — the Congo Basin/Central African clade and the West African clade.
- Each of the clades further have many lineages.
What do the genomes say?
- With over a dozen genome sequences of monkeypox, it is reassuring that the sequences are quite identical to each other suggesting that only a few introductions resulted in the present spread of cases.
- Additionally, almost all genomes have come from the West African clade, which has much lesser fatality compared to the Central African one.
- This also roughly corroborates with the epidemiological understanding that major congregations in the recent past contributed to the widespread transmission across different countries.
Does it have an effective vaccine?
- It is reassuring that we know quite a lot more about the virus and its transmission patterns.
- We also have effective ways of preventing the spread, including a vaccine.
- Smallpox/vaccinia vaccine provides protection.
- While the vaccine has been discontinued in 1980 following the eradication of smallpox, emergency stockpiles of the vaccines are maintained by many countries.
- Younger individuals are unlikely to have received the vaccine and are therefore potentially susceptible to monkeypox which could partly explain its emergence in younger individuals.
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From UPSC perspective, the following things are important :
Prelims level: Service charges on food
Mains level: Not Much
The Centre has called a meeting of restaurant owners over service charge levied by them on customers.
Why in news?
- The restaurants are collecting service charges from consumers by default, even though collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.
What are the components of a food bill?
- A restaurant bill in India comprises food charge (from the menu), with an addition of service charge (anywhere between 5 to 15 per cent) and a 5 per cent GST on this amount (IGST+SGST).
- This is for all kinds of standalone restaurants.
- In case a restaurant is located inside a hotel wherein room rate is upwards of Rs 7,500 (mostly in case of five-stars), the GST would be 18 per cent.
Nature of Service charge
- While the GST is a mandatory component as per law, the service charge is supposed to be optional.
- It is the equivalent of what is known as gratuity around the world, or tip, in casual parlance.
- Most restaurants decide the service charge on their own, and print it at the bottom of the menu with an asterisk.
Policy measures
- The Ministry of Consumer Affairs had come out with “Guidelines on Fair Trade Practices Related to Charging of Service Charge from Consumers by Hotels/ Restaurants”.
- Here it was clearly mentioned that a component of service is inherent in the provision of food and beverages ordered by a customer.
- Hence the pricing of the product is expected to cover both the goods and service components.
- It said that the bill “may clearly display that service charge is voluntary, and the service charge column of the bill may be left blank for the customer to fill up before making payment.”
What do the restaurants say?
- The levy of service charge by a restaurant is a matter of individual policy to decide if it is to be charged or not.
- There is no illegality in levying such a charge.
- Once the customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice.
- GST is also paid on the said charge to the Government.
Where does the fund go?
- Restaurants claim that a major chunk of the service charge thus collected goes to the staff, while the rest goes towards a welfare fund to help them out during good and bad times.
- It’s a default billing option, even as customers can choose not to pay it if they don’t want to.
- Of course, they are paid the salaries but the service charge works as an incentive for them.
- Restaurateurs also say that patrons can decide not to pay the charge and tip the server directly, but in this case, the backroom staff doesn’t get anything.
- A service charge ensures all staff members are rewarded evenly.
What is the issue then?
- The issue is that almost all restaurants have put service charge (fixed at their own accord) as a default billing option.
- And if a consumer is aware that it is not compulsory and wants it removed or wants to tip the server directly, the onus is on them to convince the management why they don’t want to pay it.
- The department says they received several complaints saying it leads to public embarrassment and spoils the dining experience since at the end of it, they either pay the charge quietly and exit the place feeling cheated, or have to try hard to get it removed.
- Also, there is no transparency as to where this charge goes.
- The officials also say that collecting service charge on their own and paying GST on it to the government doesn’t make it authorised.
Problems faced by customers
- It is this component which has come under dispute from time to time, with consumers arguing they are not bound to pay it.
- It also said that hotels and restaurants charging tips from customers without their express consent in the name of service charges amounts to unfair trade practice.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Challenges facing wheat economy in India
Context
The ban on the export of wheat was not unexpected. The rather ambivalent approach to agriculture comes out clearly with this move.
Understanding how this ban has come about
- We are not comfortable with market forces operating in agriculture.
- Nor are we quite sure whether we want the farmer to get a better price or the consumer to pay less.
- Governments spend a lot of money in the form of subsidies to ensure farmers are enthused to produce more wheat.
- The Centre keeps increasing the MSP for this purpose and states often pay a bonus for procurement.
- There are political reasons too as the farmer lobby needs to be placated.
- There are political reasons too as the farmer lobby needs to be placated.
- We have been taking credit for the production of wheat and every year we set a new record.
- This year, the Ministry announced that wheat production will touch a record of 111 million tonnes, which has recently been revised downwards.
- With the war, conditions have changed. Russia and Ukraine are large producers of wheat and their supply to world markets has been cut off due to sanctions and supply chain disruptions.
- With supplies interrupted, there is an opportunity for other surplus nations to step in.
- But the disruption has caused world prices to rise significantly.
Opportunity for India
- The World Bank data indicates that the price of US (soft red winter) wheat has gone up from $328/tonne in December to $672/tonne while US (hard red winter) wheat is up from $377 to $496/tonne.
- Countries that produce abundant wheat now have a chance to leverage this opportunity to export.
- However, in case of India it does appear that production will be lower than expected.
- Low wheat stock: The government has also not been able to procure wheat as farmers are no longer selling at MSP (which is at Rs 2,015/quintal) as they are getting higher prices in mandis.
- As of May 10, procurement was just 18 million tonnes against 43 million tonnes last year.
- This is a significant fall.
- But stocks with the Centre and other state agencies are 30.3 million tonnes, way above the buffer norms of 27.6 million tonnes.
- The ban on wheat exports is because of this.
Two constraints on the wheat economy
- In 2007 and again in 2021, the government banned futures trading in wheat on grounds that it led to speculative pressure on prices even though the quantity traded and the open interest were minuscule.
- At that time, it was a decline in expected output which triggered this action.
- It does look like the wheat economy will continue to operate within two constraints that have become barriers to commercialisation.
- MSP and government procurement: The first is MSP and government procurement, which feeds into the public distribution system.
- Arhatiya system: The second is the arhatiya system of trading where middlemen have come in the way of any reform.
Suggestions
- Abolish MSP and procurement system: The MSP and procurement system needs to be dismantled.
- Cash transfers: As the government has successfully expanded both the Aadhaar and Jan Dhan programmes, there should be simple cash transfers to beneficiaries.
- Buffer stocks can be held to ease distress during a crisis, but government involvement should stop there.
- Procuring unlimited quantities of wheat and keeping huge stocks has distorted the wheat matrix.
- The mandi system too needs to be revisited and alternatives have to be made available so that farmers can choose the point of sale.
Conclusion
We have been talking about being a part of global supply chains to augment value addition and accelerate growth. But when it comes to agriculture it is a blow-hot blow-cold approach. This not only affects our credibility but also sends confusing signals to producers as to what is the best way out for them.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Indo-Pacific Economic framework
Mains level: Paper 2- Opportunity for Quad plus
Context
On May 23, before the Quad leaders’ summit in Tokyo, the United States launched the Indo-Pacific Economic Framework (IPEF).
Significance IPEF
- The Indo-Pacific Economic Framework (IPEF) will consist of a diverse group of 12 countries initially — Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
- The IPEF — which covers fair trade, supply chain resilience, infrastructure, clean energy, and decarbonisation, among others — is likely to complement the other Indo-Pacific projects like the Supply Chain Resilience Initiative (SCRI) that also seeks to build resilient and secure trade linkages by reducing dependence on China.
- Decoupling from Chinese over-dependence: The US-led economic engagement is a salient attempt to allow countries to decouple from Chinese over-dependence in order to ultimately strengthen the existing free and open rules-based global order.
- Extension of plus grouping: The launch of IPEF signifies the essence of the Quad and its extension as a “plus” grouping.
- It brings together seven critical countries of the Association of Southeast Asian Nations (ASEAN), all Quad states, and dialogue partners, including South Korea, solidifying a case for the “plus” characterisation of the Quad process.
- Thus, it is an encouraging sign that the Quad countries are investing their strategic orientation in this regard.
- Importantly, both the IPEF launch, and the Tokyo summit dispel any remaining misgivings about the Quad disintegrating and certify that it is a cohesive unit where it matters.
- It would potentially represent an amalgamation of the eastern and western “like-minded” countries.
- The expanded grouping and the related Quad initiatives will build a comprehensive and integrated approach to combating shared challenges arising out of Chinese aggression.
- A hallmark of Biden’s latest Asia visit has been South Korea’s embrace of the Indo-Pacific framework.
- This is a long-awaited turn that could potentially lead to South Korea participating in a more meaningful manner in the Quad in the near future.
Importance of Taiwan
- Taiwan is a major economy in the Indo-Pacific region (as also the US’s eighth-largest trading partner in 2021 and a critical partner in diversifying the US supply chains), which is already engaged in the US-Taiwan Economic Prosperity Partnership Dialogue that includes many of the issues proposed in the IPEF.
- The inclusion of Taiwan, which already has a critical role in the global semi-conductor supply chain network, in the SCRI and the IPEF as well as, by extension, in the Quad format, in some manner would be a welcome addition.
- Geopolitical statement against coercive tactics: Importantly, Taiwan’s inclusion would also be a geopolitical statement against coercion tactics by international actors.
Inclusivity characteristics based on a commitment to the existing international order
- In its current abstract framework, the plus framework includes a wide array of states (which also comprise the IPEF) — developing and developed economies as well as middle and major powers that are committed to maintaining an inclusive, rules-based and liberal institutional order.
- The inclusivity angle is suspect as the grouping is essentially what China calls a US-led “anti-China” tool.
- Therefore, what interested states must envision is a broad, all-embracing, and comprehensive framework that can stand as a pillar for regional security and stability, multilateralism, and defence of global institutionalism and the status quo.
Conclusion
States are showing their willingness, and now it is incumbent on the Quad states to allow for the creation of a “corridor of communication” that ultimately leads to a “continental connect” to strengthen a rules-based order.
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From UPSC perspective, the following things are important :
Prelims level: QUAD
Mains level: Read the attached story
Why was it formed?
- While not stated explicitly by the leaders, a major basis for the grouping is to check China’s growing influence in the region.
- After the Indian Ocean tsunami in 2004 wreaked havoc in the region now called the Indo-Pacific, India stepped up its rescue efforts.
- India provided assistance to its maritime neighbours: Sri Lanka, the Maldives and Indonesia.
- Soon, the disaster relief effort was joined by three other naval powers — the U.S., Australia and Japan.
- Then US President George W. Bush announced that the four countries would set up an international coalition to coordinate the massive effort.
- While the charge of the rescue operations was handed over to the United Nations shortly after, it led to the birth of a new framework: the Quadrilateral or Quad.
Development of present day QUAD
- Then Japanese PM Shinzo Abe had been promoting the idea of an “arc of prosperity and freedom”.
- This brought the Quad countries closer together, further developed the concept and discussed it with then PM Manmohan Singh during a summit in December 2006.
- The 2007 Indo-U.S. Malabar naval exercises also saw the partial involvement of Japan, Australia and Singapore.
- The exercises and coordination were seen by China as an attempt to encircle it, which termed the grouping as trying to build “an Asian NATO”.
Descent and revival in its formation
- The Quad lost momentum post the 2007 meeting as the effort “dissipated amidst member leadership transitions.
- The grouping was only revived an entire decade later in 2017, at a time when all four countries had revised their assessment of the China challenge; and India had witnessed the Doklam standoff.
- Leaders of all four countries met in the Philippines for the ‘India-Australia-Japan-U.S.’ dialogue, not referred to as a Quad dialogue to avoid the notion of a “gang-up”.
Basis: Indo-Pacific
- Even at this point, a set of objectives, areas of cooperation, and even the definition of Indo-Pacific were not fixed among Quad members.
- It was in March 2021 that Mr. Biden, Mr. Modi, Australia’s outgoing PM Scott Morrison, and then Japanese PM Yoshihide Suga met virtually, for the first time as an official Quad summit.
- It released a set of objectives for the grouping in a joint statement called the ‘The Spirit of the Quad’.
What were the objectives of the grouping?
- Coming together to foster a free and open Indo-Pacific formed the bedrock of cooperation.
- Now it commits to promoting the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond.
- Emphasis was laid on “rule of law, territorial integrity, freedom of navigation and overflight, peaceful resolution of disputes, and democratic values” in the region.
Various initiatives of QUAD
- Quad leaders launched the Quad Vaccine Initiative (QVI) with the aim of manufacturing and distributing at least a billion COVID-19 vaccines for the Asia region by the end of 2022.
- As for emerging technologies, the four countries aimed to work on the development and diversification of 5G telecommunications.
- They aim for creation of supply chains for critical minerals and technologies for making semiconductors used in smartphones, another area where China is a leader.
- Quad nations had also agreed to build joint connectivity projects and transparent infrastructure funding for countries in the region.
- The Quad also created a working group for combating climate change which would oversee efforts to foster green shipping by decarbonising maritime supply chains and promoting the use of clean hydrogen.
What are the future plans of the Quad?
- The Leaders will review the progress of Quad initiatives and Working Groups, identify new areas of cooperation and provide strategic guidance and vision for future collaboration.
- The Quad summit is expected to discuss the Russian war in Ukraine, and the impact of three months of Western sanctions.
- US also unveiled the ‘Indo-Pacific Economic Framework’ (IPEF) which is a programme to bind countries in the region more closely through common standards.
- Quad members also launched a maritime monitoring plan to curb illegal fishing in the Indo-Pacific.
Various challenges
- How to deal with China thus remains the central question for Quad. Each Quad member views the Chinese threat differently.
- For Australia too, trade was the biggest issue until the recent establishment of a Chinese military base in the Solomon Islands brought a new dimension.
- Japan and India are closest to China, and both face belligerent Chinese claims to territory.
- The security build-up of QUAD is also yet to materialize.
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From UPSC perspective, the following things are important :
Prelims level: Qutub Minar
Mains level: Not Much
The Qutub Minar complex is not a place of worship and its character cannot be changed now, the Archaeological Survey of India submitted in a Delhi Court while opposing a plea challenging the dismissal of a civil suit seeking “restoration” of temples on the premises.
What is the case?
- The original suit claimed that 27 temples were demolished to build the Quwwat-ul-Islam mosque at the Qutub Minar complex.
- This pleas was dismissed last year under the provisions of Places of Worship (Special Provisions) Act, 1991.
- The Additional District Judge (ADJ) has now reserved the order.
- The petitioner said that the dismissal of the original suit based on the 1991 Act was wrong.
- The Qutub Minar complex comes under the purview of the Ancient Monuments and Archaeological Sites and Remains (AMASR) Act of 1958.
Why in news now?
- The ASI now submitted that the Qutub Minar complex was not a place of worship when it was first notified as a protected monument in 1914.
- The ASI, explained that the character of a monument is decided on the date when it comes under protection.
About Qutub Minar
- The Qutub Minar is a minaret and “victory tower” that forms part of the Qutb complex, which lies at the site of Delhi’s oldest fortified city, Lal Kot, founded by the Tomar Rajputs.
- It is a UNESCO World Heritage Site in the Mehrauli area of South Delhi.
- It can be compared to the 62-metre all-brick Minaret of Jam in Afghanistan, of c. 1190, which was constructed a decade or so before the probable start of the Delhi tower.
- The surfaces of both are elaborately decorated with inscriptions and geometric patterns.
- The Qutb Minar has a shaft that is fluted with “superb stalactite bracketing under the balconies” at the top of each stage.
Its construction
- The Qutb Minar was built over the ruins of the Lal Kot, the citadel of Dhillika.
- Qutub Minar was begun after the Quwwat-ul-Islam Mosque, which was started around 1192 by Qutb-ud-din Aibak, first ruler of the Delhi Sultanate.
- It is usually thought that the tower is named for Qutb-ud-din Aibak, who began it.
- It is also possible that it is named after Khwaja Qutbuddin Bakhtiar Kaki a 13th-century sufi saint, because Shamsuddin Iltutmish was a devotee of his.
- Quwwat-ul-Islam Mosque, to the north-east of the Minar was built by Qutub-ud-Din Aibak in A.D. 1198.
- It consists of a rectangular courtyard enclosed by cloisters, erected with the carved columns and architectural members of 27 Jain and Hindu temples, which were demolished by Qutub-ud-Din.
- This is recorded in his inscription on the main eastern entrance.
Back2Basics:
What is the Places of Worship Act?
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From UPSC perspective, the following things are important :
Prelims level: Prithviraj Chauhan
Mains level: NA
There is controversy around a new film where some communities of Rajasthan are laying claim over the 12th century emperor Prithviraj Chauhan.
Prithviraj Chauhan
- Prithviraj Chauhan (1177–1192 CE) popularly known as a king from the Chauhan (Chahamana) dynasty who ruled the territory of Sapadalaksha, with his capital at Ajmer in present-day Rajasthan.
- Ascending the throne as a minor in 1177 CE, Prithviraj inherited a kingdom which stretched from Thanesar in the north to Jahazpur (Mewar) in the south.
His legend
- He aimed to expand by military actions against neighbouring kingdoms, most notably defeating the Chandela’s.
- Prithviraj unified several Rajput clans and defeated the Ghurid army led by Muhammad Ghori near Taraori in 1191 AD.
- However, in 1192 CE, Ghori returned with an army of Turkish mounted archers and defeated the Rajput army on the same battlefield.
- Prithviraj fled the battlefield, but was captured near Sirsa and executed.
- His defeat at Tarain is seen as a landmark event in the Islamic conquest of India, and has been described in several semi-legendary accounts, most notably the Prithviraj Raso.
Prithviraj in literary works
- The image of Prithviraj as a fearless and skilled warrior that is now etched in the folk imagination can be traced back to his depiction in ‘Prithviraj Raso’.
- This was a poem in Brajbhasha attributed to Chand Bardai, which is thought to have been composed in the 16th century.
- James Mill’s ‘The History of British India’ (1817) categorized Indian history into the Hindu, Muhammadan and British periods.
- In this formulation, Prithviraj Chauhan would be the last ruler of ‘Hindu’ India.
Why is he being revived?
- To a vocal section of the Hindu right, Prithviraj Chauhan appears as “the last Hindu emperor” of India who made a valiant attempt to stop the radical invaders.
- In the popular imagination, he is the heroic figure who symbolises the exalted ideals of patriotism and national pride.
- However the historical evidence demonstrates rather different ways in which Prithviraj has been seen over the ages.
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From UPSC perspective, the following things are important :
Prelims level: FDI, FPI
Mains level: Read the attached story
The foreign direct investment (FDI) in the financial year 2021-22 has touched a “highest-ever” figure of $83.57 billion.
Get aware with the recently updated FDI norms. Key facts mentioned in this newscard can make a direct statement based MCQ in the prelims.
Ex. FDI source in decreasing order: Singapore – Mauritius – Netherland – Ceyman Islands – Japan – France
What is Foreign Direct Investment (FDI)?
- An FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
- It is thus distinguished from a foreign portfolio investment by a notion of direct control.
- FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
- Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”.
- In a narrow sense, it refers just to building a new facility, and lasting management interest.
FDI in India
- Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
- There are two routes by which India gets FDI.
1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
2) Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.
- India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
- In 2015 India overtook China and the US as the top destination for the Foreign Direct Investment.
Features of FDI
- Any investment from an individual or firm that is located in a foreign country into a country is FDI.
- Generally, FDI is when a foreign entity acquires ownership or controlling stake in the shares of a company in one country, or establishes businesses there.
- It is different from foreign portfolio investment where the foreign entity merely buys equity shares of a company.
- In FDI, the foreign entity has a say in the day-to-day operations of the company.
- FDI is not just the inflow of money, but also the inflow of technology, knowledge, skills and expertise.
- It is a major source of non-debt financial resources for the economic development of a country.
Significance of rising FDI
- This is a testament of India’s status among global investors.
Recent amendments in 2020
- The govt. has amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017.
- In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership, such subsequent change in beneficial ownership will also require Government approval.
The present position and revised position in the matters will be as under:
Present Position
- A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
- However, a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route.
- Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
Revised Position
- A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
[spot the difference]
- However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route.
- Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
In response to China
- China accused that India’s recently adopted policy goes against the principles of the World Trade Organisation (WTO).
- It tends to violate WTO’s principle of non-discrimination, and go against the general trend of liberalisation and facilitation of trade and investment.
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From UPSC perspective, the following things are important :
Prelims level: GEAC, SDN
Mains level: Read the attached story
The Department of Biotechnology (DBT) has issued guidelines easing norms for research into genetically modified (GM) crops and circumventing challenges of using foreign genes to change crops profile.
Guidelines for Safety Assessment of Genome Edited Plants, 2022: Key Highlights
- It exempt researchers who use gene-editing technology to modify the genome of the plant from seeking approvals from the Genetic Engineering Appraisal Committee (GEAC).
- The environment ministry in March 2022 exempted SDN 1 and SDN 2 genomes from Rules 7-11 of the Environment Protection Act.
- Conventional breeding technique takes 8- 10 years for development of new crop varieties; genome-editing can do this faster.
- The Environment Ministry too has sanctioned this exemption.
What are the SDNs?
The genome edited plants derived from the use of genome editing techniques employing site- directed nucleases (SDNs) such ZFNs, TALENs, CRISPR and other nucleases with similar functions are generally classified under three categories as
- Site-Directed Nuclease (SDN)-1, a site-directed mutagenesis without using a DNA sequence template;
- SDN-2, a site-directed mutagenesis using a DNA sequence template; and
- SDN-3, site-directed insertion of gene/large DNA sequence using a DNA sequence template.
What are GM crops?
- The GM plants involve transgenic technology or introducing a gene from a different species into a plant, for instance BT-cotton, where a gene from soil bacterium is used to protect a plant from pest attack.
- The worry around this method is that these genes may spread to neighboring plants, where such effects are not intended and so their applications have been controversial.
- Genome editing involves the use of technologies that allow genetic material to be added, removed, or altered at particular locations in the genome. Several approaches to genome editing have been developed.
- A well-known one is called CRISPR-Cas9, which is short for clustered regularly interspaced short palindromic repeats and CRISPR-associated protein 9.
Try this PYQ:
Q.The Genetic Engineering Appraisal Committee is constituted under the:
(a) Food Safety and Standards Act, 2006
(b) Geographical Indications of Goods (Registration and Protection) Act, 1999
(c) Environment (Protection) Act, 1986
(d) Wildlife (Protection) Act, 1972
Post your answers here.
About Genetic Engineering Appraisal Committee (GEAC)
- The Genetic Engineering Appraisal Committee (GEAC) is a statutory body conotified under the Environment (Protection) Act, 1986.
- It was formed as the Genetic Engineering Approval Committee and was renamed to its current name in 2010.
- It functions under the Ministry of Environment, Forests & Climate Change.
- The body regulates the use, manufacture, storage, import and export of hazardous microorganisms or genetically-engineered organisms and cells in India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Pravaig Field Pack
Mains level: Not Much
A Bengaluru-based venture has produced a rugged tactical battery that it is now planning to sell to the North Atlantic Treaty Organisation (NATO) forces in Europe.
Pravaig Field Pack
- It is a heavy-duty power bank that is portable and weighs 14 kilograms.
- It is of great utility to the digitally connected modern military and Special Forces personnel who have to operate in high-risk zones while using gadgets that require constant power back-up.
- These batteries are designed, engineered and made in India.
- The field pack can be used to charge a MacBook 60 times.
Significance of Pravaig
- This supply marks a major shift in the defense landscape of India — a tipping point in the reversal of India’s high technology defense industry, from users to developers, from importers to exporters.
- The field pack can be used to energize a military person’s field duties and it can be used to deploy remote sensors.
- A powerful tactical battery can be used even to operate larger military equipment such as drones and it can even help coordinate tactical operations which involve multiple weapons systems.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 253
Mains level: Paper 2- Parliamentary supervision of trade pacts
Context
India is negotiating and signing several free trade agreements (FTAs) with countries like Australia, the UK, Israel, and the EU. While the economic benefits of these FTAs have been studied, there is very little discussion on the lack of parliamentary scrutiny of these treaties.
Provisions in the Constitution
- In the Constitution, entry 14 of the Union list contains the following item — “entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries”.
- According to Article 246, Parliament has the legislative competence on all matters given in the Union list.
- Thus, Parliament has the power to legislate on treaties.
- This power includes deciding how India will ratify treaties and thus assume international law obligations.
- Article 253 elucidates that the power of Parliament to implement treaties by enacting domestic laws also extends to topics that are part of the state list.
Lack of parliamentary oversight and its implications
- No law laying down the process: While Parliament in the last seven decades has passed many laws to implement international legal obligations imposed by different treaties, it is yet to enact a law laying down the processes that India needs to follow before assuming international treaty obligations.
- Given this legislative void, and under Article 73(the powers of the Union executive are co-terminus with Parliament), the Centre has been not just negotiating and signing but also ratifying international treaties and assuming international law obligations without much parliamentary oversight.
- Arguably, Parliament exercises control over the executive’s treaty-making power at the stage of transforming a treaty into the domestic legal regime.
- However, this is a scenario of ex-post parliamentary control over the executive.
- In such a situation, Parliament does not debate whether India should or should not accept the international obligations; it only deliberates how the international law obligations, already accepted by the executive, should be implemented domestically.
- Against the practice in other liberal democracies: This practice is at variance with that of several other liberal democracies.
- In the US, important treaties signed by the President have to be approved by the Senate.
- In Australia, the executive is required to table a “national interest analysis” of the treaty it wishes to sign in parliament, and then this is examined by a joint standing committee on treaties – a body composed of Australian parliamentarians.
Way forward
- Indian democracy needs to inculcate these healthy practices of other liberal democracies.
Conclusion
Effective parliamentary supervision will increase the domestic acceptance and legitimacy of international treaties, especially economic agreements, which are often critiqued for imposing undue restraints on India’s economic sovereignty.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- University branch campuses
Context
India, after half a century of keeping its higher education doors closed to foreigners, is on the cusp of opening itself to the world.
Higher education reforms
- Currently, India does not allow the entry and the operation of foreign university branch campuses.
- The NEP 2020 was a turning point for the entry of foreign universities as it recommended allowing foreign universities ranked in the “top 100” category to operate in India — under somewhat unrealistic conditions.
- Internationalism: The wide-ranging National Education Policy (NEP) 2020 promises higher education reforms in many areas, and internationalisation is prominent among them.
- Strengthening India’s soft power: Among the underlying ideas is to strengthen India’s “soft power” through higher education collaboration, bringing new ideas and institutions from abroad to stimulate reform and show “best practice”, and in general to ensure that Indian higher education, for the first time, is a global player.
- In February 2022, Finance Minister Nirmala Sitharaman, in her Budget speech, announced that “world-class foreign universities and institutions would be allowed in the planned business district in Gujarat’s GIFT City”
- It was reported that in April 2022, the University Grants Commission (UGC) formed a committee to draft regulations to allow foreign institutions in the “top 500” category to establish campuses in India — realising that more flexibility was needed
- Bringing global experience to India: Establishing branch campuses of top foreign universities is a good idea as this will bring much-needed global experience to India.
Challenges
- Globally, branch campuses, of which there are around 300 now, provide a mixed picture.
- Many are aimed at making money for the sponsoring university — and this is not what India wants.
- It will not be easy to attract foreign universities to India and even more difficult to create the conditions for them to flourish.
- Many of those top universities are already fully engaged overseas and would likely require incentives to set up in India.
- Further, there are smaller but highly regarded universities outside the ‘top 500’ category that might be more interested.
- Universities around the world that have academic specialisations focusing on India, that already have research or faculty ties in the country, or that have Non-Resident Indians (NRI) in senior management positions may be easier to attract.
- What is most important is to prevent profit-seekers from entering the Indian market and to encourage foreign institutions with innovative educational ideas and a long-term commitment.
- Many host countries have provided significant incentives, including building facilities and providing necessary infrastructure.
- Foreign universities are highly unlikely to invest significant funds up front.
- A big challenge will be India’s “well-known” bureaucracy, especially the multiple regulators.
Opportunities
- India is seen around the world as an important country and an emerging higher education power.
- It is the world’s second largest “exporter” of students, with 4,61,792 students studying abroad (according to the UNESCO Institute for Statistics).
- And India has the world’s second largest higher education system.
- Foreign countries and universities will be eager to establish a “beachhead” in India and interested in providing opportunities for home campus students to learn about Indian business, society, and culture to participate in growing trade and other relations.
- Benefits of branch campuses: International branch campuses, if allowed, could function as a structurally different variant of India’s private university sector.
- Branch campuses, if effectively managed, could bring much needed new ideas about curriculum, pedagogy, and governance to Indian higher education — they could be a kind of educational laboratory.
Current initiatives
- There has been modest growth of various forms of partnerships between Indian and foreign institutions.
- The joint PhD programmes offered by the Indian Institute of Technology Bombay-Monash Research Academy and the University of Queensland-Indian Institute of Technology Delhi Academy of Research (UQIDAR), both with Australian partners, are some examples.
- Another example is the Melbourne-India Postgraduate Academy (MIPA). It is a joint initiative of the Indian Institute of Science Bangalore, the Indian Institute of Technology Madras, the Indian Institute of Technology Kanpur and the Indian Institute of Technology Kharagpur with the University of Melbourne.
- MIPA provides students with an opportunity to earn a joint degree accredited both in India and Australia: from the University of Melbourne and one of the partnering Indian institutions.
- These partnerships suggest that India could offer opportunities for international branch campuses as well.
Challenges
- Globally, branch campuses, of which there are around 300 now, provide a mixed picture.
- Many are aimed at making money for the sponsoring university — and this is not what India wants.
- It will not be easy to attract foreign universities to India and even more difficult to create the conditions for them to flourish.
- Many of those top universities are already fully engaged overseas and would likely require incentives to set up in India.
- Further, there are smaller but highly regarded universities outside the ‘top 500’ category that might be more interested.
- Universities around the world that have academic specialisations focusing on India, that already have research or faculty ties in the country, or that have Non-Resident Indians (NRI) in senior management positions may be easier to attract.
- What is most important is to prevent profit-seekers from entering the Indian market and to encourage foreign institutions with innovative educational ideas and a long-term commitment.
- Many host countries have provided significant incentives, including building facilities and providing necessary infrastructure.
- Foreign universities are highly unlikely to invest significant funds up front.
- A big challenge will be India’s “well-known” bureaucracy, especially the multiple regulators.
Conclusion
After examining national experiences elsewhere, clear policies can be implemented that may be attractive to foreign universities. Once policies are in place, the key to success will be relationships among universities.
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