💥UPSC 2026, 2027, 2028 UAP Mentorship (March Batch) + Access XFactor Notes & Microthemes PDF
Talk to mentor

Civilsdaily

Login

Archives: News

  • G20 : Economic Cooperation ahead

    India appoints Sherpa for G20 Summit

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

    The government has appointed a union minister as Sherpa for the G20 summit.

    Who is a Sherpa (in IR context)?

    • A sherpa is the personal representative of a head of state or government who prepares an international summit, particularly the annual G7 and G20 summits.
    • Between the G7 summits, there are multiple sherpa conferences where possible agreements are laid out.
    • This reduces the amount of time and resources required at the negotiations of the heads of state at the final summit.
    • The name sherpa—without further context—refers to sherpas for the G7 summit, but the designation can be extended to different regular conferences where the participation of the head of state is required.
    • The sherpa is generally quite influential, although they do not have the authority to make a final decision about any given agreement.
    • The name is derived from the Sherpa people, a Nepalese ethnic group, who serve as guides and porters in the Himalayas, a reference to the fact that the sherpa clears the way for a head of state at a major summit.

    About G20

    • Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.
    • Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
    • To tackle the problems or address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.
    • In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
    • The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.

    Aims and objectives

    • The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
    • The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
    • It seeks to address issues that go beyond the responsibilities of any one organization.

    Members of G20

    The members of the G20 consist of 19 individual countries plus the European Union (EU).

    • The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
    • The European Union is represented by the European Commission and by the European Central Bank.

    Its significance

    • G20 is a major international grouping that brings together 19 of the world’s major economies and the European Union.
    • Its members account for more than 80% of global GDP, 75% of trade and 60% of population.

    India and G20

    • India has been a member of the G20 since its inception in 1999.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    Govt. mulls allowing local sales by SEZ units sans import tag

    Prelims Only | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    The government is considering a proposal to allow producers in Special Economic Zones (SEZs) to sell their output to the domestic market without treating them as imports.

    What are SEZs?

    • A Special Economic Zone (SEZ) is an area in which the business and trade laws are different from the rest of the country.
    • SEZs are located within a country’s national borders, and their aims include increasing trade balance, employment, increased investment, job creation, and effective administration.
    • To encourage businesses to set up in the zone, financial policies are introduced.
    • These policies typically encompass investing, taxation, trading, quotas, customs, and labor regulations.
    • Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.

    SEZs in India

    • The SEZ policy in India first came into inception on April 1, 2000.
    • The prime objective was to enhance foreign investment and provide an internationally competitive and hassle-free environment for exports.
    • The idea was to promote exports from the country and realizing the need for a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally.
    • Subsequently, the SEZ Act 2005, was enacted to provide the umbrella legal framework, covering all important legal and regulatory aspects of SEZ development as well as for units operating in SEZs.

    Who can set up SEZs? Can foreign companies set up SEZs?

    • Any private/public/joint sector or state government or its agencies can set up an SEZ.
    • Yes, a foreign agency can set up SEZs in India.

    What is the role of state governments in establishing SEZs?

    • State governments will have a very important role to play in the establishment of SEZs.
    • A representative of the state government, who is a member of the inter-ministerial committee on private SEZ, is consulted while considering the proposal.
    • Before recommending any proposals to the ministry of commerce and industry (department of commerce), the states must satisfy themselves that they are in a position to supply basic inputs like water, electricity, etc.

    Are SEZs controlled by the government?

    • In all SEZs, the statutory functions are controlled by the government.
    • The government also controls the operation and maintenance function in the central government-controlled SEZs. The rest of the operations and maintenance are privatized.

    Are SEZs exempt from labor laws?

    • Normal labor laws are applicable to SEZs, which are enforced by the respective state governments.
    • The state governments have been requested to simplify the procedures/returns and for the introduction of a single-window clearance mechanism by delegating appropriate powers to development commissioners of SEZs.

    Who monitors the functioning of the units in SEZ?

    • The performance of the SEZ units is monitored by a unit approval committee consisting of a development commissioner, custom, and representative of the state government on an annual basis.

    What are the special features for business units that come to the zone?

    • Business units that set up establishments in an SEZ would be entitled to a package of incentives and a simplified operating environment.
    • Besides, no license is required for imports, including second-hand machinery.

    How do SEZs help a country’s economy?

    • SEZs play a key role in the rapid economic development of a country.
    • In the early 1990s, it helped China and there were hopes that the establishment in India of similar export-processing zones could offer similar benefits – provided, however, that the zones offered attractive enough concessions.
    • Traditionally the biggest deterrents to foreign investment in India have been high tariffs and taxes, red-tapism, and strict labor laws.
    • To date, these restrictions have ensured that India has been unable to compete with China’s massively successful light-industrial export machine.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Monetary Policy Committee Notifications

    Crypto is not currency, must regulate it as asset: Former RBI DG

    Prelims Only | Economics | Mains Paper 3:

    Former RBI Deputy Governor R. Gandhi made a case for treating and regulating crypto as a separate asset class with a view to enabling governments around the world to effectively deal with illegal activities associated with virtual currencies.

    Why in news?

    • After quite a lot of debate over the years, people have fully understood that crypto cannot be a currency because the fundamental element of a currency that it should be a legal tender is missing in this case.
    • The general consensus among many policymakers is that it should be deemed as an asset, not as a currency, not as a payment instrument, and not as a financial instrument as there is no clear identified issuer.

    What are Cryptocurrencies?

    • A cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database.
    • It uses strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.
    • It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.
    • Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems.

    How does it work?

    • Cryptocurrencies work using a technology called the blockchain.
    • Blockchain is a decentralized technology spread across many computers that manage and record transactions.

    What is Blockchain Technology?

    • Simply, blockchain is a decentralized, distributed, and public digital ledger.
    • Blockchains are a new type of network infrastructure (a way to organize how information and value move around on the internet) that creates ‘trust’ in networks by introducing distributed verifiability, auditability, and consensus.
    • Blockchains create trust by acting as a shared database, distributed across vast peer-to-peer networks that have no single point of failure and no single source of truth.
    • No individual entity can own a blockchain network, and no single entity can modify the data stored on it unilaterally without the consensus of its peers.

    Also read

    Cryptocurrency and Regulation of Official Digital Currency Bill, 2021

    Back2Basics: Legal Tender Money

    • A legal tender is a coin or a banknote that is legally tenderable for discharge of debt or obligation.
    • Coin of any denomination not lower than one rupee shall be legal tender for any sum not exceeding one thousand rupees.
    • Fifty paise (a half rupee) coins shall be legal tender for any sum not exceeding ten rupees.
    • While anyone cannot be forced to accept coins beyond the limits mentioned above, voluntarily accepting coins for amounts exceeding the limits mentioned above is not prohibited.
    • Every banknote issued by the Reserve Bank of India unless withdrawn from circulation shall be legal tender at any place in India.
    • ₹1 notes issued by the Government of India are also Legal Tender.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Innovations in Biotechnology and Medical Sciences

    [pib] What is Pollen Calendar?

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Chandigarh now has its first pollen calendar, which can identify potential allergy triggers and provide a clear understanding for clinicians as well as allergy sufferers about their causes to help limit their exposure during high pollen loads.

    What is a Pollen Calendar?

    • Pollen calendars represent the time dynamics of airborne pollen present in a particular geographical area.
    • They yield readily accessible visual details about various airborne pollen present throughout the year in a single picture.

    Is this a new concept in India? Where else in the west has this calendar been used?

    • Though the concept is not essentially new, this is one of the major environmental concerns that had not been addressed for the Indian cities.
    • Such calendars are location-specific, as pollen concentrations are closely related to locally distributed flora.
    • Europe, UK and the US are using regional pollen calendars in a big way to prevent and diagnose allergic rhinitis/hay fever and predict the timing and severity of the pollen season.

    Why is it important to study pollen?

    • Pollen grains are male biological structures with the primary role of fertilization, but when inhaled by humans, they may strain the respiratory system and cause allergies.
    • Pollen found suspended in air can cause widespread upper respiratory tract and naso-bronchial allergy with manifestations like asthma, seasonal rhinitis, and bronchial irritation.
    • About 20-30 percent of the population suffers from allergic rhinitis/hay fever in India, and approximately 15 percent develop asthma.
    • Pollen is considered a major outdoor airborne allergen responsible for allergic rhinitis, asthma, and atopic dermatitis in humans.

    What were the key findings?

    • The study highlights the variability of crucial pollen types in different seasons.
    • Spring and autumn are two seasons when airborne pollen dominate.
    • The findings will enhance the understanding of pollen seasons, which will in turn help minimize pollen allergies.

    How will a pollen calendar benefit people, especially those who have respiratory issues?

    • A pollen calendar provides a clear understanding for clinicians, as well as people with allergies to identify the potential allergy triggers and help to limit their exposure during high pollen load season.
    • The early advisories can be prepared and disseminated through media channels to the citizens so that they can use protective gear during the period when the concentration of allergic pollen will be high.

    Does the study infer that gardens and parks in the city contribute to the pollen and thus there must be proper scientific tree plantation?

    • It is important to involve experts while designing parks.
    • We should try to plant trees/shrubs that release no or little pollen.
    • Trees such as palms, nettle, safeda, white mulberry (shahtoot), congress grass, pine, have a high incidence of pollen.

    What kind of trees must be grown alongside our roads or in parks?

    • Plant monoecious plants (male and female flowers on the same plant).
    • Hibiscus, lilies, and holly that are grown widely in Chandigarh are examples of such plants.
    • Cucumbers and squashes are also monoecious. Select plants with low to moderate pollen production.
    • Non-allergic or entomophilous plant species should be chosen to provide an allergen-free atmosphere.
    • Examples of such plants include rose, jasmine, salvia, Bougainvillea, Raat Rani, and sunflower.

    With inputs from:

    Indian Express

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    Places in news: Gulf of Mexico

    Prelims Only | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    An oil spill spanning at least 10 miles has been captured by satellite imagery in waters off the Louisiana coast near the Gulf of Mexico.

    Gulf of Mexico

    • The Gulf of Mexico is an ocean basin and a marginal sea of the Atlantic Ocean, largely surrounded by the North American continent.
    • It is bounded on the northeast, north and northwest by the Gulf Coast of the United States; on the southwest and south by the Mexican states of Tamaulipas, Veracruz, Tabasco, Campeche, Yucatan, and Quintana Roo; and on the southeast by Cuba.
    • The US states of Texas, Louisiana, Mississippi, Alabama, and Florida, which border the Gulf on the north, are often referred to as the “Third Coast” of the United States (in addition to its Atlantic and Pacific coasts).
    • It is covered with a tangle of pipes, wells and other energy infrastructure, much of it no longer used, as a result of generations of oil extraction there.

    Its formation

    • The Gulf of Mexico took shape approximately 300 million years ago as a result of plate tectonics.
    • Its floor consists of sedimentary rocks and recent sediments.
    • It is connected to the part of the Atlantic Ocean through the Florida Straits between the US and Cuba, and with the Caribbean Sea via the Yucatán Channel between Mexico and Cuba.
    • Because of its narrow connection to the Atlantic Ocean, the Gulf experiences very small tidal ranges.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

    Revolution unfolding in data regulation

    | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Context

    A number of countries have been looking to extend their existing data protection frameworks to ensure that users have more effective control over their data than their regulations currently allow.

    Measures to unlock the data silos

    • Benefits: These measures aimed at unlocking data silos will make it easier for data to flow from the entity that currently holds it to any other data business that might want to use it with the permission of the data subject.
    • In Australia, Consumer Data Right framework will allow consumers in Australia to require any business with which they have a commercial relationship to transfer that data to any other business of their choice.
    • The first sector in which this new data right is being rolled out in the banking sector, with power set to follow close on its heels.
    • The EU’s proposed Data Act will create a fairer data economy by ensuring better access to and use of data and is intended to cover both business-to-business and business-to-government transfers of data.
    • Along similar lines, the EU has also drafted a Data Governance Act to govern the data exchanges and platforms.
    • It will thus both enable and regulate new data-sharing arrangements that will intermediate the transfer of data from data businesses that currently hold it to those that have been permitted to use it.
    • Data regulation to protect and utilize data: Regulatory activity seems to suggest that it is not enough to protect data if you cannot also ensure that this data is effectively utilized.

    What are the issues with regulation measures?

    1) Law and regulation cannot keep pace with technology

    • Technology determines how data is collected, processed and used, and, by extension, the manner in which it is transferred.
    • Decades of trying to regulate technology businesses have taught us that laws and regulation simply cannot keep pace with changes in technology.
    • No matter how fast we move, if the only weapon we are using to regulate technology is the law, we will be doomed to play catch-up forever.
    • These new consumer-centric measures are likely to fail if they are to be implemented solely through legislation.

    2) Data transfers in the absence of a legal framework can lead to problems in India

    • India has adopted a slightly different approach to data transfers known as the Data Empowerment and Protection Architecture (DEPA).
    • DEPA offers a technology-based solution for consent-based data flows, allowing users to transfer their data from data businesses that currently hold them to those that want to use them.
    •  Last week, the country’s Account Aggregator framework—the first implementation of DEPA—went live in the financial sector.
    •  It too suffers from infirmities that could threaten its success.
    • India still does not have a data protection regulation and implementing a technological solution for data transfers in the absence of a legal framework could lead to new problems.

    Way forward: Techno-legal approach

    • Use techno-legal approach to regulate: Technology businesses are most effectively regulated through a judicious mix of law and technology—strong, principle-based laws to provide the regulatory foundation, with protocol-based guardrails to ensure compliance.
    • Seven countries came together to endorse a techno-legal approach to data regulation.
    • If successful, this would be the first global attempt to adopt a techno-legal solution for data-transfer regulation.

    Consider the question “There is growing appreciation in regulatory circles that it is not enough to protect data if you cannot also ensure that this data is effectively utilized” In light of this, examine the challenges in regulation of data while ensuring its safe transfer for utilisation.” 

    Conclusion

    Techno-legal solution offers effective ways to deal with the problems of data regulation and data transfer.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • PPP Investment Models: HAM, Swiss Challenge, Kelkar Committee

    Consequences of asset monetisation on ordinary citizens

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Context

    In the Budget for 2021-22, the Finance Minister had announced the Government’s decision to monetise operating public infrastructure assets. The National Monetisation Pipeline (NMP) was unveiled, which shows that the Government intends to raise ₹6-lakh crore over the next four years by monetising several “core assets”.

    Four issues with NMP

    1)  Assets transferred would be performing assets and not idle asset

    • Strategic and significant asset: The Government has identified “performing assets” to transfer to private entities and these are both strategic and significant.
    • These include over 26,700 kilometres of highways, 400 railway stations, 90 passenger trains etc.
    • Moreover, existing public sector infrastructure in telecoms, power transmission and distribution and petroleum, petroleum products and natural gas pipelines are included in the NMP.
    • Under the NMP, the Government intends to lease or divest its rights over these assets via long-term leases against a consideration that can be upfront and/or periodic payments.

    2) Consequences for ordinary citizens

    • There are two dimensions about the impact on common citizens.
    • Public as a stakeholder: The assets have all been created through substantial contribution by the tax-paying public, who have stakes in their operation and management.
    • Double taxation: These assets have, until now, been managed by the Government and its agencies,  which operate in public interest.
    • Therefore, charges borne by the public for using these assets have remained reasonable.
    • With private companies getting the sole responsibility of running all these assets, prices of these services will go up, as resutl the citizens of this country would be double-taxed.
    • First, they paid taxes to create the assets, and would now pay higher user charges.
    • Concern: Therefore, as the Government prepares to transfer “performing assets” to the private companies, it has the responsibility to ensure that user charges do not price the consumers out of the market.

    3) Are there other avenues to plug the revenue gap?

    • Increase tax revenue: One possibility was to increase the tax revenue, for at 17.4% in 2019-20, India’s tax to GDP ratio was relatively low, as compared to most advanced nations.
    • Improvements in tax compliance and plugging loopholes have long been emphasised as the surest way to improve tax revenue, but little has been done, as the following example shows.
    • Since 2005-06, the Government has been providing data on the profits declared and taxes paid by companies that file their returns electronically.
    • Data shows that India’s large companies have been exploiting the loopholes for reporting lower profits and to escape the tax net.

    4) Efficiency issue

    • According to NITI Aayog, the “strategic objective of the Asset Monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies”.
    • The NITI Aayog objective assumes that public sector enterprises are inefficient, which is contrary to the reality.
    • In 2018-19, while 28% of these enterprises were loss-making, the corresponding figure for large companies was 51%.

    Consider the question “How asset monetisation is different from the privatisation? What are the issues with the National Manetisation Pipeline that seeks to monetise the assets?”

    Conclusion

    The government should address the issues mention here associated with the roll out of the National Monetisation Pipeline to make it a success.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Parliament – Sessions, Procedures, Motions, Committees etc

    Spirit of federalism lies in consultation

    op-ed snap | Polity | Mains Paper 2: Federalism

    Context

    Recently, various State governments raised concerns about Central unilateralism in the enactment of critical laws on subjects in the Concurrent List of the Seventh Schedule.

    Objection of the state against Centre legislating on the subject in Concurrent List without consulting States

    • Unilateral legislation on subjects in Concurrent list: Kerala Chief Minister stated that it is not in the essence of federalism for the Union government to legislate unilaterally, on the subjects in the Concurrent List.
    • Encroaching on powers of States: Tamil Nadu Chief Minister raised the issue by calling on other Chief Ministers against the Union government encroaching on powers under the State and Concurrent Lists.
    • The Kerala Legislative Assembly unanimously passed a resolution against the Electricity (Amendment) Bill, 2020.
    • The Tamil Nadu Legislative Assembly passed a resolution against the controversial farm laws.

    Background of the Concurrent List

    • The Concurrent List gives the Union and the State Legislatures concurrent powers to legislate on the subjects contained in it.
    • Purpose of Concurrent List: The fields in the Concurrent List were to be of common interest to the Union and the States, and the power to legislate on these subjects to be shared with the Union so that there would be uniformity in law across the country.

    Union government extending its control on subjects in the Concurrent List and State list

    1) Farm laws: Encroaching on the powers of States

    • Parliament passed the farm laws without consulting the States.
    • State List subject: The laws, essentially related to Entry 14 (agriculture clause) belonging to the State List.
    • However, Parliament passed the law citing Entry 33 (trade and commerce clause) in the Concurrent List.
    • Against legal principle set by the Supreme Court: The Supreme Court, beginning from the State of Bombay vs F.N. Balsara case, said that if an enactment falls within one of the matters assigned to the State List and reconciliation is not possible with an entry in the Concurrent or Union List after employing the doctrine of “pith and substance”, the legislative domain of the State Legislature must prevail.

    2) Major Port Authorities Act 2021 and Indian Ports Bill: Centre taking away the power of State

    • The Major Ports Authorities Act, 2021, was passed by Parliament earlier this year.
    • Goa objected to the law, stating that it would lead to the redundancy of the local laws.
    • Concurrent List subject: When it comes to non-major ports, the field for legislation is located in Entry 31 of the Concurrent List. 
    • The Indian Ports Act, 1908, presently governs the field related to non-major ports.
    • As per the Indian Ports Act, 1908, the power to regulate and control the minor ports remained with the State governments.
    • The new draft Indian Ports Bill, 2021, proposes the Maritime State Development Council (MSDC), which is overwhelmingly controlled by the Union government.

    3) Electricity (Amendment) Bill,2020: Centre taking away powers of State

    • Various States like West Bengal, Tamil Nadu and Kerala have also come forward against the Electricity (Amendment) Bill, 2020.
    • The field related to electricity is traceable to Entry 38 of the Concurrent List.
    • The power to regulate the sector was vested with the State Electricity Regulatory Commissions (SERCs), members of which were appointed by the State government.
    • The proposed amendment seeks to establish National Selection Committee, dominated by members nominated by the Union government that will make appointments to the SERCs.
    • The amendment also proposes the establishment of a Centrally-appointed Electricity Contract Enforcement Authority (ECEA).
    • In effect, the power to regulate the electricity sector would be taken away from the State government.

    Way forward

    • Consultation with States: The National Commission to Review the Working of the Constitution (NCRWC), or the Venkatachaliah Commission, had recommended that individual and collective consultation with the States should be undertaken through the Inter-State Council established under Article 263 of the Constitution.
    • Coordination of policy and action in concurrent jurisdiction: The Sarkaria Commission Report had recommended that there should be a coordination of policy and action in all areas of concurrent or overlapping jurisdiction through a process of mutual consultation.
    • Limit powers to ensuring uniformity: The Sarkaria Commission further recommended that the Union government, while exercising powers under the Concurrent List, limit itself to the purpose of ensuring uniformity in basic issues of national policy and not more.
    • Responsibility of Centre: The Supreme Court itself had held in the S.R. Bommai vs Union of India case, the States are not mere appendages of the Union.
    • The Union government should ensure that the power of the States is not trampled with.

    Consider the question “There has been instances of protest by the State government against Centre legislating unilaterally on subjects in Concurrent List. What are the implications of this for the federalism? Suggest the way forward.”

    Conclusion

    The essence of cooperative federalism lies in consultation and dialogue, and unilateral legislation without taking the States into confidence will lead to more protests on the streets.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

     

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Insolvency and Bankruptcy Code

    New Code for Creditors (CoC) under IBC

    | Economics | Mains Paper 3: Indian Economy

    The insolvency regulator has called for public comments on a proposal to introduce a code of conduct for Committees of Creditors (CoC), of companies undergoing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC).

    Before proceeding, try this PYQ first:

    Q. Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news? (CSP 2017)

     

    (a) It is a procedure for considering the ecological costs of developmental schemes formulated by the Government.

    (b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.

    (c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.

    (d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.

     

    Post your answers here.

    About IBC

    • The IBC, 2016 is the bankruptcy law of India that seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
    • It is a one-stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement.
    • The code aims to protect the interests of small investors and make the process of doing business less cumbersome.

    Key features

    Insolvency Resolution: The Code outlines separate insolvency resolution processes for individuals, companies, and partnership firms. The process may be initiated by either the debtor or the creditors. A maximum time limit, for completion of the insolvency resolution process, has been set for corporates and individuals.

    1. For companies, the process will have to be completed in 180 days, which may be extended by 90 days, if a majority of the creditors agree.
    2. For startups (other than partnership firms), small companies, and other companies (with assets less than Rs. 1 crore), the resolution process would be completed within 90 days of initiation of request which may be extended by 45 days.

    Insolvency regulator: The Code establishes the Insolvency and Bankruptcy Board of India, to oversee the insolvency proceedings in the country and regulate the entities registered under it. The Board will have 10 members, including representatives from the Ministries of Finance and Law, and the RBI.

    Insolvency professionals: The insolvency process will be managed by licensed professionals. These professionals will also control the assets of the debtor during the insolvency process.

    Bankruptcy and Insolvency Adjudicator: The Code proposes two separate tribunals to oversee the process of insolvency resolution, for individuals and companies:

    1. National Company Law Tribunal: for Companies and Limited Liability Partnership firms; and
    2. Debt Recovery Tribunal: for individuals and partnerships

    What is the recent development?

    Ans. Code of conduct for Committees of Creditors (CoC)

    • A CoC is to be composed of financial creditors to the Corporate Debtor (CD) — or operational creditors in the absence of unrelated financial creditors.
    • Under the IBC, CoC is empowered to take key decisions, including decisions on haircuts for creditors, that are binding on all stakeholders, including those dissenting.
    • The CoC is also empowered to seek and choose the best resolution plan for a corporate debtor from the market, and its role is vital for a timely and successful resolution for a CD.
    • The IBBI noted that a code of conduct for CoCs would promote transparent and fair working on the part of CoCs.

    What are the issues that the code of conduct is seeking to address?

    • Several cases in which certain lenders have withdrawn funds from a CD undergoing insolvency proceeding and contributed to delays in the insolvency process.
    • Delays in resolution are seen as contributing to the loss of value in corporate debtors and have become a key criticism of the IBC, with over 75 percent of proceedings having crossed the 270-day timeline.
    • The IBBI highlighted cases in which representatives of lenders have had to seek approval from seniors for decisions such as an appointment of resolution professionals.
    • IBBI has recommended that a code of conduct require that members of the CoC nominate representatives with sufficient authorization to participate in meetings and make decisions during the process.
    • The regulator also highlighted cases where lenders have withdrawn funds from a corporate debtor during insolvency or liquidation proceedings.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

  • Goods and Services Tax (GST)

    Govt must constitute GST tribunal: SC

    | Economics | Mains Paper 3: Indian Economy

    The Supreme Court has warned that the government had no option but to constitute the Goods and Services Tax (GST) Appellate Tribunal.

    What is GST Appellate Tribunal?

    • The GST Appellate Tribunal (GSTAT) is the second appeal forum under GST for any dissatisfactory order passed by the First Appellate Authorities.
    • The National Appellate Tribunal is also the first common forum to resolve disputes between the centre and the states.
    • Being a common forum, it is the duty of the GST Appellate Tribunal to ensure uniformity in the redressal of disputes arising under GST.
    • It holds the same powers as the court and is deemed Civil Court for trying a case.

    Constitution of the GST Appellate Tribunal

    The GSTAT has the following structure:

    1. National Bench: The National Appellate Tribunal is situated in New Delhi, constitutes a National President (Head) along with 2 Technical Members (1 from Centre and State each)
    2. Regional Benches: On the recommendations of the GST Council, the government can constitute (by notification) Regional Benches, as required. As of now, there are 3 Regional Benches (situated in Mumbai, Kolkata and Hyderabad) in India.
    3. State Bench and Area Bench

    Why in news now?

    • The GST tribunal has not been constituted even four years after the central GST law was passed in 2016.
    • Section 109 of the GST Act mandates the constitution of the Tribunal.
    • Citizens aggrieved are constrained to approach respective High Court and the same was overburdening the work of the High Courts.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Back2Basics: Goods and Services Tax

    • The GST is a value-added tax levied on most goods and services sold for domestic consumption.
    • It was launched into operation on the midnight of 1st July 2017.
    • It subsumed almost all domestic indirect taxes (petroleum, alcoholic beverages, and stamp duty are the major exceptions) under one head.
    • The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.
    • GST is levied at four rates viz. 5%, 12%, 18% and 28%. The schedule or list of items that would fall under these multiple slabs is worked out by the GST council.

    Types

    • The GST to be levied by the Centre is called Central GST (CGST) and that to be levied by the States is called State GST (SGST).
    • Import of goods or services would be treated as inter-state supplies and would be subject to Integrated Goods & Services Tax (IGST) in addition to the applicable customs duties.

    The GST Council

    • It is a constitutional body (Article 279A) for making recommendations to the Union and State Government on issues related to GST.
    • The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in charge of Finance or Taxation of all the States.
    • It is considered as a federal body where both the centre and the states get due representation.

    Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

    Attend Now

Join the Community

Join us across Social Media platforms.