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  • Goods and Services Tax (GST)

    Issues with special treatment of states with higher contribution to GST pool

    The article highlights the issues with the demand for special treatment of states with higher contribution to GST pool.

    Debate on GST

    • The issue of GST concessions on COVID relief has brought into focus the structural flaws in the GST structure.
    • In this process, the structure and design of GST — essentially a tax on consumption — is being questioned.
    • The issue of  “rich” states versus “poor” ones, the decision-making process in the GST Council, and the representation of various states in the Council have also come into the focus.

    Why States should be treated equally in GST Council

    1) Consensus on GST

    • The structure and design of GST and its basic features, as enshrined in the 101st Constitution Amendment Act, were unanimously adopted and endorsed by Parliament.
    • The broader and finer points of the law, were thoroughly discussed and debated and recommended by the GST Council after a complete consensus.
    • These were further debated and approved by not only Parliament but also by each of the state legislatures.
    • There was complete consensus even on the issue of delegated legislation — something unheard of in a federal environment.

    2) Equality of all states

    • In this process of consensus building, no state was accorded even the slightest of special privilege.
    • That is why the consensus surrounding GST was unprecedented whether in India or any other federation.
    • Therefore, arguing for special treatment of some states is a dangerous idea, particularly in governance, and more so in a welfare state.
    • For, this would open the gates for elitist arguments such as special rights for bigger taxpayers, unequal voting rights in elections and preferential treatment for a select few.

    3) Issues with greater contribution to GST revenue pool

    • It is not correct to argue that the GST collected in a state represents the revenue of that particular state for, under the GST mechanism, the tax deposited by a taxpayer in a state is a function of largely the value of supplies made by such taxpayer.
    • Approximately 50 per cent at the aggregate level and much higher at the state level of such values are of an inter-state nature.
    • In other words, most supplies made from any producing state are consumed elsewhere and the revenue in such a situation naturally and rightfully accrues to the destination state.

    4) No transfers based on a formula

    • It is equally fallacious to argue that under GST, most of the revenue is collected by the Union and is transferred to the states on the basis of some formula.
    • The quantum of IGST revenue that is settled to any state is directly related to the returns filed in that state and the cross utilisation of credit exhibited in such returns; part of this settlement also comprises tax on supplies destined to that state, as exhibited in the returns of such suppliers.
    • There is no “formula” as such for “transfer” of revenue collected by the Centre. Instead, such “transfers” are directly relatable to the consumption (whether intermediate or final) in any state.

    5) Locational or geographical advantage

    • There is another dimension to the higher revenue collection in a few states.
    • One may note that such states enjoy locational or geographical advantages, being mostly coastal and immensely suited to the needs of trade and distribution as also manufacturing.
    • Also, the disadvantage to such states on account of lower availability of certain vital minerals like coal and iron ore was undone by the principle of freight equalisation resorted to in the years following Independence.
    • This contributed, in no small measure, to the development of such states.

    6) Unequal transfers of Central receipts

    • The argument of unequal transfers of central receipts also does not hold water, either in India or in any other federation.
    • As is well known, such transfers are intended for correcting horizontal fiscal imbalances in a federation.

    Conclusion

    We should thus concentrate on carrying forward the glorious traditions of perhaps the only institution of co-operative federalism that we have been able to build so far.

  • Crop Insurance – PMFBY, etc.

    Beed Model of Crop Insurance in Maharashtra

    Maharashtra CM has urged the Prime Minister for state-wide implementation of the ‘Beed model’ of the crop insurance scheme Pradhan Mantri Fasal Bhima Yojana (PMFBY).

    Consider this question:

    Q.Payouts released often exceed the premium collected in PMFBY. Discuss this limitation of the PMFBY where insurance firms refuse to bid in drought prone regions.

    What is PMFBY?

    • Launched in 2016, the flagship PMFBY insures farm losses against inclement weather events.
    • Farmers pay 1.5-2% of the premium with the rest borne by the state and central governments.
    • It is a central scheme implemented by state agriculture departments as per central guidelines.
    • For farmers, the low rate of premium and relatively decent coverage make the scheme attractive.
    • Prior to 2020, the scheme was optional for farmers who did not have loans pending, but mandatory for loanee farmers.
    • Since 2020, it has been optional for all farmers. In Maharashtra, over the years, more non-loanee farmers have enrolled, although it was optional for them.

    Issues faced in Maharashtra

    • Voices were raised in Maharashtra about the need to change the scheme.
    • Delay in claim settlement, failure to recognize localized weather events, and stringent conditions for claims were among the concerns. Another complaint was about alleged profiteering by insurance companies.
    • For Maharashtra, where farmers predominantly depend of monsoon rains to water their crops, the scheme soon turned out to be non-profitable for insurance companies given the high payments they had to make.
    • Payouts were close to or exceeded the premium collected in some years, leading to losses to insurance companies.

    What is Beed model the state government wants implemented?

    • Located in the drought-prone Marathwada region, the district of Beed presents a challenge for any insurance company.
    • During the 2020 kharif season, tenders for implementation did not attract any bids. So, the state Agriculture Department decided to tweak the guidelines for the district.
    • The state-run Indian Agricultural Insurance Company implemented the scheme.
    • Under the new guidelines, the insurance company provided a cover of 110% of the premium collected, with caveats.
    • If the compensation exceeded the cover provided, the state government would pay the bridge amount.
    • If the compensation was less than the premium collected, the insurance company would keep 20% of the amount as handling charges and reimburse the rest to the state government.

    Greater role for States

    • In a normal season where farmers report minimal losses, the state government is expected to get back money that can form a corpus to fund the scheme for the following year.
    • However, the state government would have to bear the financial liability in case of losses due to extreme weather events.

    Why is the government pushing for it for the entire state?

    • The reason why Maharashtra is pushing for this scheme is that in most years, the claims-to-premium ratio is low with the premium being paid to the company.
    • In the Beed model, the profit of the company is expected to reduce and the state government would access another source of funds.
    • The reimbursed amount can lead to lower provisioning by the state for the following year, or help in financing the paying the bridge amount in case of a year of crop loss.
    • For farmers, however, this model does not have any direct benefit.

    Challenges ahead

    • The chances of the model being implemented for the present Kharif season appear slim.
    • Questions remain on how the state government is going to raise the excess amount, and how the reimbursed amount would be administered.
  • G20 : Economic Cooperation ahead

    G-7 agenda this year and what is in it for India

    At the invitation of UK PM, PM Modi will participate in the Outreach Sessions of the G7 Summit this week.

    Note the members of G7 and G20. UPSC may puzzle you asking which G20 nation isn’t a member of G7.

    The Group of 7

    • The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
    • It is an intergovernmental organization that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
    • Initially, it was formed as an effort by the US and its allies to discuss economic issues.
    • The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
    • It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
    • Canada joined the group in 1976, and the European Union began attending in 1977.

    Evolution of the G-7

    • When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
    • And it was a cosy club for tackling issues such as the response to oil shocks.
    • Now it accounts for about 40% of global gdp.
    • Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader g20.
    • The G-7 became the G-8 in 1997 when Russia was invited to join.
    • In 2014, Russia was debarred after it took over Crimea.

    Agenda of G-7 this year

    • The UK currently holds the presidency of the G7 and has invited India, along with Australia, Republic of Korea and South Africa, as guest countries for the Summit.
    • The meetings will be held in hybrid mode.
    • The theme for the summit is ‘Build Back Better’ and the UK has outlined four priority areas for its presidency:
    1. leading the global recovery from coronavirus while strengthening resilience against future pandemics;
    2. promoting future prosperity by championing free and fair trade;
    3. tackling climate change and preserving the planet’s biodiversity; and
    4. championing shared values and open societies.

    Is India attending it for the first time?

    • Since 2014, this is the second time PM Modi will be participating in a G7 meeting.
    • India had been invited by the G7 French Presidency in 2019 to the Biarritz Summit as a “Goodwill Partner” and the PM participated in the Sessions on ‘Climate, Biodiversity and Oceans’ and ‘Digital Transformation’.
    • During Prime Minister Manmohan Singh’s UPA rule, India attended the G8 five times.
    • Russia was indefinitely suspended in March 2014 after the annexation of Crimea, reducing the count of the G8.

    What to watch out for at this G-7 summit?

    • This will be President Biden’s first visit to Europe, where he will signal his key message “America is back”.
    • He has flown down to the UK, where he will meet British Prime Minister Boris Johnson, Queen Elizabeth II and other allies at the G7 summit.
    • He’ll continue on to a NATO conclave in Brussels on June 14, before his conversation with Russian President Vladimir Putin in Geneva two days later.
    • This sequencing of events has been done to coordinate Washington’s moves of consultations with allies before meeting the Russian President.
    • This ties in well with the US President’s initial foray into multilateralism — he held the first summit of leaders of “the Quad” — Australia, India, Japan and the US.
    • This was aimed at increasing vaccine production and aligning their positions toward Beijing.

    Why is this meeting important?

    • The US-Russia relations are going through a rough patch — some analysts even refer to it as possibly their nadir since the end of the Cold War.
    • Interestingly, the venue of the Biden-Putin meeting — Geneva — is the place where then US President Ronald Reagan held his first meeting with Soviet Union’s Mikhail Gorbachev in 1985.
    • The key element that is making Washington take the important step of engaging with Moscow to contain the damage in their bilateral ties is that the US wants to focus on its strategic rival, China.

    What’s in it for India?

    • India has long called for reforming global institutions and groupings to reflect modern-day geopolitical realities.
    • Trumps’ offer to expand G7 fitted into New Delhi’s idea of being part of the global high table.
    • With an assertive China looming, the US is calling all like-minded countries to partner in dealing with Beijing.
    • If Biden and Johnson want to take the leap forward and constitute a global democratic alliance of 10-11 countries, it will be an important signal.
    • India is likely to get vaccines from the US — both directly as well as through COVAX. Initial estimates suggest India will get about 2 to 3 million vaccines in the first tranche.
  • Parliament – Sessions, Procedures, Motions, Committees etc

    What is Breach of Privilege motion?

    An MP has filed a breach of privilege motion against the Lakshadweep Administrator for denying him permission to visit the islands, preventing him from meeting his cadre and people of the island.

    Breach of Privilege

    • The powers, privileges and immunities of either House of the Indian Parliament and of its Members and committees are laid down in Article 105 of the Constitution.
    • Article 194 deals with the powers, privileges and immunities of the State Legislatures, their Members and their committees.
    • Parliamentary privilege refers to the right and immunity enjoyed by legislatures, in which legislators are granted protection against civil or criminal liability for actions done or statements made in the course of their legislative duties.

    Answer this PYQ in the comment box:

    Q.With reference to the Parliament of India, which of the following Parliamentary Committees scrutinizes and reports to the House whether the powers to make regulations, rules, sub-rules, by-laws etc. conferred by the constitution of delegated by the Parliament are being properly exercised by the Executive within the scope of such delegation?

    (a) Committee on Government Assurances

    (b) Committee on Subordinate Legislation

    (c) Rules Committee

    (d) Business Advisory Committee

    What constitutes a breach of this privilege?

    • While the Constitution has accorded special privileges and powers to parliamentarians and legislators to maintain the dignity and authority of the Houses, these powers and privileges are not codified.
    • Thus, there are no clear, notified rules to decide what constitutes a breach of privilege, and the punishment it attracts.
    • Any act that obstructs or impedes either House of the state legislature in performing its functions, or which obstructs or impedes any Member or Officer of such House in the discharge of his duty, or has a tendency, directly or indirectly, to produce such results is treated as a breach of privilege.
    • It is a breach of privilege and contempt to print or publish libel reflecting on the character or proceedings of the House or its Committees or on any member of the House for or relating to his character or conduct as a legislator.

    Procedure followed in cases of an alleged breach

    • The Legislative Assembly Speaker or Legislative Council Chairman constitutes a Privileges Committee consisting of 15 members in the Assembly and 11 members in the Council.
    • The members to the committee which has quasi-judicial powers are nominated based on the party strength in the Houses.
    • The Speaker or Chairman first decides on the motions.
    • If the privilege and contempt are found prima facie, then the Speaker or Chairman will forward it to the Privileges Committee by following the due procedure.
    • At present, there is no Privileges Committee in either House of the state legislature.
    • The Committee will seek an explanation from all the concerned, will conduct an inquiry and will make a recommendation based on the findings to the state legislature for its consideration.
  • US policy wise : Visa, Free Trade and WTO

    US, UK seek to sign New Atlantic Charter

    US President Joe Biden and British Prime Minister Boris Johnson seeks to sign a new Atlantic Charter.

    What is Atlantic Charter?

    • The Atlantic Charter was a statement issued on 14 August 1941 that set out American and British goals for the world after the end of World War II.
    • The charter’s adherents signed the Declaration by United Nations on 1 January 1942, which was the basis for the modern United Nations.
    • The charter inspired several other international agreements and events that followed the end of the war.
    • The dismantling of the British Empire, the formation of NATO, and the General Agreement on Tariffs and Trade (GATT) all derived from the Atlantic Charter.

    Why sign new charter?

    • At their meeting, the two leaders plan to sign what they’re calling a new Atlantic Charter, pledging to “defend the principles, values, and institutions of democracy and open societies.”
    • US hopes to reassure European allies that the US had shed the transactional tendencies of Donald Trump’s term and is a reliable partner again.
    • The US staunchly opposed the Brexit movement, the British exodus from the European Union that Mr. Johnson championed, and has expressed great concern with the future of Northern Ireland.
    • Biden once called the British leader a “physical and emotional clone” of Trump.
  • International Space Agencies – Missions and Discoveries

    CHIME Telescope

    Scientists with the Canadian Hydrogen Intensity Mapping Experiment (CHIME) Collaboration have assembled the largest collection of fast radio bursts (FRBs) in the telescope’s first FRB catalog.

    CHIME Telescope

    • CHIME is an interferometric radio telescope at the Dominion Radio Astrophysical Observatory in British Columbia, Canada.
    • It consists of four antennas consisting of 100 x 20-meter cylindrical parabolic reflectors with 1024 dual-polarization radio receivers suspended on support above them.
    • The telescope receives radio signals each day from half of the sky as the Earth rotates.
    • While most radio astronomy is done by swiveling a large dish to focus light from different parts of the sky, CHIME stares, motionless, at the sky, and focuses incoming signals using a correlator.
    • This is a powerful digital signal processor that can work through huge amounts of data, at a rate of about seven terrabytes per second, equivalent to a few percent of the world’s Internet traffic.

    What are FRBs?

    • FRBs are oddly bright flashes of light, registering in the radio band of the electromagnetic spectrum, which blaze for a few milliseconds before vanishing without a trace.
    • These brief and mysterious beacons have been spotted in various and distant parts of the universe, as well as in our own galaxy.
    • Their origins are unknown and their appearance is highly unpredictable.
    • But the advent of the CHIME project has nearly quadrupled the number of fast radio bursts discovered to date.
    • With more observations, astronomers hope soon to pin down the extreme origins of these curiously bright signals.
  • Higher Education – RUSA, NIRF, HEFA, etc.

    [pib] All India Survey on Higher Education (AISHE) 2019-20

    Union Education Minister has announced the release of the report of All India Survey on Higher Education (AISHE) 2019-20.

    This newscard provides useful data about the state of higher education in India on various parameters. Such data should not be missed while substantiating any point in answer writing.

    About AISHE

    • AISHE was established by the Ministry of HRD for conducting an annual web-based survey, thereby portraying the status of higher education in the country.
    • The survey is conducted for all educational institutions in India on many categories like teachers, student enrolment, programs, examination results, education finance, and infrastructure.
    • This survey is used to make informed policy decisions and research for the development of the education sector.
    • This Report provides key performance indicators on the current status of Higher education in the country.

    Highlights of the 2019-20 Report

    (1) Total Enrolment

    (2) Gross Enrolment Ratio

    (3) Gender Parity Index (GPI)

    • GPI in Higher Education in 2019-20 is 1.01 against 1.00 in 2018-19 indicating an improvement in the relative access to higher education for females of eligible age group compared to males.

    (4) Pupil-Teacher Ratio

     

    • TPR in Higher Education in 2019-20 is 26. In 2019-20: Universities: 1,043(2%); Colleges: 42,343(77%) and stand-alone institutions: 11,779(21%).

    (5) Enrolment in higher education

    • 38 crore Students enrolled in programs at under-graduate and post-graduate levels.
    • Out of these, nearly 85% of the students (2.85 crore) were enrolled in the six major disciplines such as Humanities, Science, Commerce, Engineering & Technology, Medical Science and IT & Computer.

    (6) Doctorate pursuance

    • The number of students pursuing PhD in 2019-20 is 2.03 lakh against 1.17 lakh in 2014-15.

    (7) Total number of teachers

    • The Total Number of Teachers stands at 15,03,156 comprising of 57.5% male and 42.5% female.
  • Roads, Highways, Cargo, Air-Cargo and Logistics infrastructure – Bharatmala, LEEP, SetuBharatam, etc.

    [pib] Fast Tracking Freight in India

    NITI Aayog, RMI and RMI India’s new report, Fast Tracking Freight in India: A Roadmap for Clean and Cost-Effective Goods Transport, presents key opportunities for India to reduce its logistics costs.

    Freight transport in India

    • Freight transportation is a critical backbone of India’s growing economy, and now more than ever, it’s important to make this transport system more cost-effective, efficient, and cleaner.
    • Due to the rising demand for goods and services, freight transport demand is expected to grow rapidly in the future.
    • While freight transport is essential to economic development, it is plagued by high logistics costs and contributes to rising CO2 emissions and air pollution in cities.

    Highlights of the Roadmap

    • According to the report, India has the potential to:
    1. Reduce its logistics cost by 4% of GDP
    2. Achieve 10 gigatonnes of cumulative CO2 emissions savings between 2020 and 2050
    3. Reduce nitrogen oxide (NOx) and particulate matter (PM) emissions by 35% and 28%, respectively, until 2050
    • The report outlines solutions for the freight sector related to policy, technology, market, business models, and infrastructure development.

    Various recommendations

    • The recommendations include increasing the rail network’s capacity, promoting intermodal transport, improving warehousing and trucking practices, policy measures and pilot projects for clean technology adoption, and stricter fuel economy standards.
    • When successfully deployed at scale, the proposed solutions can help India establish itself as a leader in logistics innovation and efficiency in the Asia–Pacific region and beyond.

    Transforming the system

    • As India’s freight activity grows five-fold by 2050 and about 400 million citizens move to cities, a whole system transformation can help uplift the freight sector.
    • This transformation will be defined by tapping into opportunities such as efficient rail-based transport, the optimization of logistics and supply chains, and a shift to electric and other clean-fuel vehicles.
    • These solutions can help India save ₹311 lakh crore cumulatively over the next three decades.
  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    Glacier melting in Hindu Kush Himalayas

    Up to two billion people in southeast Asia can face food and water shortages even as the Hindu Kush Himalayan (HKH) mountain ranges lose up to two-thirds of its ice by 2100, a United Nations-backed research flagged.

    Hindu Kush Himalayas

    • The HKH region, often referred to as the ‘Third Pole’, is spread over 3,500 square kilometers across eight countries including India, Nepal, and China.
    • The range forms the western section of the Hindu Kush Himalayan Region (HKH) and is the westernmost extension of the Pamir Mountains, the Karakoram, and the Himalayas.
    • It divides the valley of the Amu Darya (the ancient Oxus) to the north from the Indus River valley to the south.
    • It contains the world’s third-largest storage of frozen water after the Antarctica and Arctic.
    • Over 240 million people live in the region’s mountains; 1.7 billion live in the river basins downstream, while food grown in these basins reaches three billion people.

    Continuous warming

    • HKH region continues to warm through 21st century even if the world was able to limit global warming at the agreed 1.5 degrees Celsius.
    • Another study published in 2019 on the ice thickness of glaciers had estimated that glaciers in the HKH may contain 27 percent less ice than previously suggested.
    • The HKH region lies downwind from some of the most heavily polluted places on Earth. This threatens agriculture, climate as well as monsoon patterns.
  • Coronavirus – Health and Governance Issues

    South Asia’s healthcare burden

    The article contrasts the public healthcare system in South Asian countries with that of their Southeast Asian peers and highlights the shortcomings.

    Subpar public healthcare system

    • Super spreader events, a fragile health infrastructure neglected for decades, citizens not following health protocols, and logistical mismanagement were the factors responsible for the destruction in the second Covid-19 wave.
    • What has exacerbated the situation is a subpar public healthcare system running on a meagre contribution of a little over 1% of India’s Gross Domestic Product (GDP).
    • While the private medical sector is booming, the public healthcare sector has been operating at a pitiful 0.08 doctors per 1,000 people, World Health Organization’s (WHO) prescribed standard ois1:1000.
    • India has only half a bed available for every 1,000 people, which is a deficient figure even for normal days.
    • Bangladesh and Pakistan fare no better, with a bed to patient ratio of 0.8 and 0.6, respectively, and a doctor availability of less than one for every 1,000 people.
    • While ideally, out-of-pocket expenditure should not surpass 15% to 20% of the total health expenditure, for India, Bangladesh and Pakistan, this figure stands at an appalling 62.67%, 73.87% and 56.24%, respectively.

    Lack of investment in healthcare

    • Major public sector investments by the ‘big three’ of South Asia, i.e., India, Pakistan, and Bangladesh, are towards infrastructure and defence, with health taking a backseat.
    • While India has the world’s third-largest military expenditure, its health budget is the fourth-lowest.
    • Indian government in this year’s budget highlighted an increase of 137% in health and well-being expenditure, a closer look reveals a mismatch between facts and figures.
    • In Pakistan, even amidst the pandemic, the defence budget was increased while the spending on health remained around $151 million.
    • Not too far behind is Bangladesh, with decades of underfunding culminating in a crumbling public healthcare system.
    • Major public sector investments by the ‘big three’ of South Asia, i.e., India, Pakistan, and Bangladesh, are towards infrastructure and defence, with health taking a backseat.
    • A quick look at pre-pandemic sectoral allocations explains the chronically low status of human development indicators in the three countries.

    Learning from Southeast Asia

    • Southeast Asia has prioritised investments in healthcare systems while broadening equitable access through universal health coverage schemes.
    • Vietnam’s preventive measures focused on investments in disease surveillance and emergency response mechanisms.
    • Even countries like Laos and Cambodia are making a constant effort towards improving the healthcare ecosystem.
    • All have done much better than their South Asian peers.

    Conclusion

    Learning from the devastation unleashed by the pandemic, South Asian countries must step up investment in their public healthcare sectors to make them sustainable, up to date and pro-poor; most importantly, the system should not turn its back on citizens.

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