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

    [pib] SPICe+ Portal

    21 September 2020 | PIB | Economics
    Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    The Ministry of Corporate Affairs has notified and deployed a web-form namely ‘SPICe+’ as a part of Govt of India’s Ease of Doing Business (EODB) initiatives.

    Try this MCQ:

    Q.The SPICe+ Portal sometimes seen in news is related to which of the following Ministry?

    (a) Ministry of Environment, Forest and Climate Change

    (b) Ministry of Commerce and Industry

    (c) Ministry of Corporate Affairs

    (d) Ministry of Agriculture & Farmers’ Welfare

    SPICe+ Portal

    • It offers 10 services by three Central Government Ministries and Departments (Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance), one State Government (Maharashtra) and various Banks.
    • Thus it saves the procedure, time and cost for Starting a Business in India.
    • These 10 services are:-
    1. Name reservation
    2. Incorporation
    3. DIN allotment
    4. Mandatory issue of PAN
    5. Mandatory issue of TAN
    6. Mandatory issue of EPFO registration
    7. Mandatory issue of ESIC registration
    8. Mandatory issue of Profession Tax registration (Maharashtra)
    9. Mandatory Opening of Bank Account for the Company and
    10. Allotment of GSTIN (if so applied for)

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

    Labour law Reforms

    21 September 2020 | Bills/Act/LawsPIB | Economics
    Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    This session of Lok Sabha has passed 3 Historic and path-breaking Labour Codes.

    UPSC may ask the major laws subsumed under these Labour Codes.

    What are the 3 bills?

    The 3 bills which were passed are

    1. Industrial Relations Code, 2020
    2. Code on Occupational Safety, Health & Working Conditions Code, 2020 &
    3. Social Security Code, 2020

    All the labour laws (29 in number) being amalgamated into 4 labour codes are :

    Name of the Code 

    Amalgamated laws
    Wage Code

     

    		 4 laws –

    1. The Payment of Wages Act, 1936
    2. The Minimum Wages Act, 1948
    3. The Payment of Bonus Act, 1965
    4. The Equal Remuneration Act, 1976
    IR Code

     

    		 3 laws –

    1. The Trade Unions Act, 1926
    2. The Industrial Employment (Standing orders) Act, 1946
    3. The Industrial Disputes Act, 1947
    OSH Code

     

    		 13 laws –

    1. The Factories Act, 1948
    2. The Plantations Labour Act, 1951
    3. The Mines Act, 1952
    4. The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
    5. The Working Journalists (Fixation of Rates of Wages) Act, 1958
    6. The Motor Transport Workers Act, 1961
    7. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
    8. The Contract Labour (Regulation and Abolition) Act, 1970
    9. The Sales Promotion Employees (Conditions of Service) Act, 1976
    10. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
    11. The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981
    12. The Dock Workers (Safety, Health and Welfare) Act, 1986
    13. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
    Social Security Code

     

    		 9 laws –

    1. The Employees’ Compensation Act, 1923
    2. The Employees’ State Insurance Act, 1948
    3. The Employees Provident Fund and Miscellaneous Provisions Act, 1952
    4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
    5. The Maternity Benefit Act, 1961
    6. The Payment of Gratuity Act, 1972
    7. The Cine Workers Welfare Fund Act, 1981
    8. The Building and Other Construction Workers Welfare Cess Act, 1996
    9. The Unorganised Workers’ Social Security Act, 2008

     

    Here are the key features of these bills:

     (A) Social Security Code, 2020

    • The facility of ESIC would now be provided in all 740 districts. At present, this facility is being given in 566 districts only.
    • EPFO’s coverage would be applicable on all establishments having 20 workers. At present, it was applicable only on establishments included in the Schedule.
    • Provision has been made to formulate various schemes for providing comprehensive social security to workers in the unorganised sector.
    • A “Social Security Fund” will be created on the financial side in order to implement these schemes.
    • Work to bring newer forms of employment created with the changing technology like “platform worker or gig worker” into the ambit of social security has been done in the Social Security Code.
    • Provision for Gratuity has been made for Fixed Term Employee and there would not be any condition for minimum service period for this.
    • With the aim of making a national database for unorganised sector workers, registration of all these workers would be done on an online portal and this registration would be done on the basis of Self Certification through a simple procedure.

     (B) Occupational Safety, Health & Working Conditions Code, 2020

    • Free health checkup once a year by the employer for workers which are more than a certain age.
    • A legal right for getting Appointment Letter given to workers for the first time.
    • Cine Workers have been designated as Audio Visual Worker so that more and more workers get covered under the OSH code. Earlier, this security was being given to artists working in films only.

    (C)  Industrial Relations Code, 2020

    Efforts made by the Government for quickly resolving disputes of the workers include:

    • Compulsory facility for Helpline for redressal of problems of migrant workers.
    • Making a national database of migrant workers.
    • Provision for the accumulation of one day leave for every 20 days worked when work has been done for 180 days instead of 240 days.
    • Equality for women in every sphere: Women have to be permitted to work in every sector at night, but it has to be ensured that provision for their security is made by the employer and consent of women is taken before they work at night.
    • In the event of the death of a worker or injury to a worker due to an accident at his workplace, atleast 50 % share of the penalty would be given. This amount would be in addition to Employees Compensation.
    • Provision of “Social Security Fund” for 40 Crore unorganized workers alongwith GIG and platform workers and will help Universal Social Security coverage
    • Occupational Safety & Health Code to also can now over cover workers from IT and Service Sector.
    • 14 days notice for Strike so that in this period amicable solution comes out.

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  • Important Judgements In News

    Hate speech in India

    19 September 2020 | | Governance
    Mains Paper 2: Executive & Judiciary

    Context

    • Sudarshan TV case will have several implication for the regulation of free speech.
    • In principle, Indian law allows prior restraint on broadcasting. This prior restraint should be used sparingly and must meet a high constitutional bar.
    • Indian law also allows regulation for hate speech.

    Maintaining the equilibrium

    • The government feared that if it did not have the power to regulate speech, it will threaten the stability of society.
    • The hate and violence got the state to betray its own liberal commitments
    • Liberals never acquired the confidence of people to let go of  state regulation in the name of defending the republic.
    • The spread of hate speech and its political consequences are now infinitely greater.
    • The situation, where communication mediums are used to target communities, are not outside the realm of possibility.
    •  It is for this reason we still have so many restraints on speech.

    Challenges in regulation of speech

    • Almost every regulation of speech, no matter how well intentioned, increases the power of the state.
    • But now, in the current context, empowering the state is a frightening prospect as well.
    • The issue is fundamentally political and we should not pretend that fine legal distinctions will solve the issue.
    • An over-reliance on legal instruments to solve fundamentally social and political problems often backfires.

    3 lessons to learn

    • 1) The more the state regulates, the more it politicises the regulation of speech, and ultimately legitimate dissent will be the victim.
    • 2) There is a whole bunch of laws and regulation already on the books for regulation, these have been ineffective because of institutional dysfunction.
    • 3) Social media operates on a set of monetising incentives. But broadcast media is also based on political economy.
    • The granting of licences has always been a political affair; the pricing structures set by the TRAI have perverse consequences for quality and competition.
    • Our current media landscape is neither a market nor a state. The more the underlying political economy of media is broken, the less likely it is that free speech will stand a chance.

    Way forward

    • Not post facto content regulation, but a market structure that can help provide more checks and balances.
    • Not let bad media drive out good.
    • The Court suo motu setting up a regulatory framework does not inspire confidence. It is not its jurisdiction to begin with.
    •  This is something for Parliament to think about.

    Conclusion

    The government must walk the tight rope of regulation and safeguarding the rights of all.

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  • Goods and Services Tax (GST)

    On the GST issue, the Centre must lead

    19 September 2020 | op-ed snap | Economics
    Mains Paper 3: Indian Economy

    The article deal with the issue of GST compensation and analyses the various estimates of revenue shortfall given by the Centre.

    Context

    • The Goods and Services Tax (GST) Council meeting has now been deferred to the first week of October due to sharp disagreement between the States and the Centre.

    Background of GST

    • The Centre had brought the States on board GST by promising higher revenue collection.
    • States were lured by the promise of 14% annual growth in GST revenue over the base year of 2015-16.
    • Any shortfall from this (for five years) was to be compensated by levying a cess on luxury and sin goods.

    What are the options given by the Centre

    •  The transfers due since April 2020 have been withheld.
    • In the last GST Council meeting held on August 27, the Centre gave the States two options.
    • First, they could borrow ₹97,000 crore (the shortfall in the GST revenue compensation) from the Reserve Bank of India (RBI) under a special window at a low rate of interest.
    • Second, borrow ₹2.35-lakh crore (the total compensation shortfall) from the market with the RBI facilitating it.
    • The burden of repayment would be borne by the future collections from the compensation cess.
    • It was proposed that this cess which was to end in June 2022 could be extended to facilitate the repayment of the debt.

    Issues with the estimates

    • Given the uncertainty, how accuracy of the estimates of ₹97,000 crore and ₹2.35-lakh crore offered to the States is questionable.
    • When the Ministry of Finance is refusing to give a figure for growth in 2020-21, how such estimates are arrived at gains significance.

    Budgetary calculations

    • The Union Budget presented on February 1, 2020 assumed a nominal growth of 10%.
    • But optimistically, the Centre’s budgetary calculations will be off by at least 20%.
    • Revenue will fall by much more than 20%.
    •  So, income tax collection will also be short by much more than 20%.
    • The direct tax/GDP per cent may be expected to fall from 5.5% last year to less than 4% this fiscal.
    • Thus, at an optimistic guess, if the economy declines by only 10%, the total tax collection will be down by about ₹12-lakh crore in 2020-21.

    Conclusion

    As many predictions are that the economy will be down by much more than 10% used in the calculations above, the revenue shortfall is likely to be far greater. This points to the dire position of the Centre (and the States) and the inevitability of a large borrowing programme. Only the Centre is in a position to do such massive borrowing.

    Back2Basics: Two options for the GST compensation

    • Option 1 has a special window for states, coordinated by the Finance Ministry, to borrow the projected shortfall of Rs 97,000 crore only on account of GST implementation — and not the Covid-19 pandemic.
    • This amount can be fully repaid from the compensation cess fund, without being counted as states’ debt.
    • Option 2 takes into account the impact of the pandemic, proposing states to borrow the entire Rs 2.35 lakh crore and bearing the interest burden though principal will be repaid from the cess proceeds.
    • The GST shortfall amount (Rs 97,000 crore) will not be counted as states’ debt, while the rest of the amount of Rs 1.38 lakh crore will be counted in the books of the states.

    Source:

    https://indianexpress.com/article/business/economy/gst-compensation-centre-gives-states-2-options-easier-terms-for-lower-borrowing-6575499/

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  • Foreign Policy Watch: India-Afghanistan

    Role for India in Afghan peace push

    19 September 2020 | op-ed snap | International Relations
    Mains Paper 2: India & Its Neighborhood – Relations

    The U.S. objectives

    • Following  4 were the states as objectives of the Afghan peace process.
    • 1) An end to violence by declaring a ceasefire.
    • 2) An intra-Afghan dialogue for a lasting peace.
    • 3) The Taliban cutting ties with terrorist organisations such as al Qaeda.
    • 4)  U.S. troop withdrawal.

    Evolving Indian stand in the peace process

    • India’s vision of a sovereign, united, stable, plural and democratic Afghanistan is one that is shared by a large constituency in Afghanistan, cutting across ethnic and provincial lines.
    • At Doha meeting, India’s External Affairs Ministerreiterated that the peace process must be “Afghan led, Afghan owned and Afghan controlled”.
    • But Indian policy has evolved from its earlier hands-off approach to the Taliban.
    • U.S. and Russian representatives suggested if India had concerns regarding anti-India activities of terrorist groups, it must engage directly with the Taliban. In other words.

    Limited interest of the major powers

    • Major powers have limited interests in the peace process.
    • The European Union has made it clear that its financial contribution will depend on the security environment and the human rights record.
    • China can always lean on Pakistan to preserve its security and connectivity interests.
    • For Russia, blocking the drug supply and keeping its southern periphery secure from extremist influences is key.
    • That is why no major power is taking ownership for the reconciliation talks, but merely content with being facilitators.

    Conclusion

    A more active engagement will enable India to work with like-minded forces in the region to ensure that the vacuum created by the U.S. withdrawal does not lead to an unravelling of the gains registered during the last two decades.

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  • Foreign Policy Watch: India-Pakistan

    Indus Water Treaty turns 60

    19 September 2020 | | International Relations
    Mains Paper 2: India & Its Neighborhood – Relations

    September 19 this year marks the 60th anniversary of the Indus Water Treaty (IWT) between India and Pakistan.

    Tap to read more about Indus River System:

    Drainage System | Part 3

    Indus Waters Treaty, 1960

    • The Indus Waters Treaty is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
    • According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi and the Sutlej was given to India
    • The control over the water flowing in three “western” rivers of India — the Indus, the Chenab and the Jhelum was given to Pakistan
    • The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic, industrial and non-consumptive uses such as navigation, floating of property, fish culture, etc. while laying down precise regulations for India to build projects
    • India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.

    Based on equitable water-sharing

    • Back in time, partitioning the Indus rivers system was inevitable after the Partition of India in 1947.
    • The sharing formula devised after prolonged negotiations sliced the Indus system into two halves.
    • Equitable it may have seemed, but the fact remained that India conceded 80.52 per cent of the aggregate water flows in the Indus system to Pakistan.
    • It also gave Rs 83 crore in pounds sterling to Pakistan to help build replacement canals from the western rivers. Such generosity is unusual of an upper riparian.
    • India conceded its upper riparian position on the western rivers for the complete rights on the eastern rivers. Water was critical for India’s development plans.

    India plays resilient

    • That the treaty has remained “uninterrupted” is because India respects its signatory and values trans-boundary Rivers as an important connector in the region in terms of both diplomacy and economic prosperity.
    • There have been several instances of terror attacks which could have prompted India, within the Vienna Convention on the Law of Treaties, to withdraw from the IWT.
    • However, on each occasion, India chose not to do so.

    Significance of the treaty

    • It is a treaty that is often cited as an example of the possibilities of peaceful coexistence that exist despite the troubled relationship.
    • Well-wishers of the treaty often dub it “uninterrupted and uninterruptible”.
    • The World Bank, which, as the third party, played a pivotal role in crafting the IWT, continues to take particular pride that the treaty functions.

    Need for a rethink

    • The role of India, as a responsible upper riparian abiding by the provisions of the treaty, has been remarkable.
    • However, of late, India is under pressure to rethink the extent to which it can remain committed to the provisions, as its overall political relations with Pakistan becomes intractable.

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  • Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

    CAROTAR 2020 Rules

    19 September 2020 | Bills/Act/Laws | Economics
    Mains Paper 3: Indian Economy

    The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020) shall come into force from September 21.

    Try this PYQ:

    Q.In the context of the affairs of which of the following is the phrase “Special Safeguard Mechanisms” mentioned in the news frequently?

    (a) United Nations Environment Programme

    (b) World Trade Organization

    (c) ASEAN- India Free Trade Agreement

    (d) G-20 Summits

    CAROTAR rules

    • Importers will have to do their due diligence to ensure that imported goods meet the prescribed ‘rules of origin’ provisions.
    • This is the essential availing concessional rate of customs duty under free trade agreements (FTAs).
    • A list of minimum information, which the importer is required to possess, has also been provided in the rules along with general guidance.
    • Also, an importer would now have to enter certain origin related information in the Bill of Entry, as available in the Certificate of Origin.

    Why need CAROTAR?

    • CAROTAR 2020 supplements the existing operational certification procedures prescribed under different trade agreements.
    • India has inked FTAs with several countries, including Japan, South Korea and ASEAN members.
    • Under such agreements, two trading partners significantly reduce or eliminate import/customs duties on the maximum number of goods traded between them.
    • The new rules will assist customs authorities in the smooth clearance of legitimate imports under FTAs.

    Its significance

    • The ASEAN FTA allows imports of most items at nil or concessional basic customs duty from the 10-nation bloc.
    • Major imports to India come from five ASEAN countries — Indonesia, Malaysia, Thailand, Singapore and Vietnam.
    • The benefit of concessional customs duty rate applies only if an ASEAN member country is the country of origin of goods.
    • This means that goods originating from China and routed through these countries will not be eligible for customs duty concessions under the ASEAN FTA.

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  • Coastal Zones Management and Regulations

    [pib] “Blue Flag” Certification

    19 September 2020 | PIB | Environment
    Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    The Union Ministry of Environment, Forest and Climate Change (MoEFCC) has announced the first time eight beaches of India are recommended for the coveted International eco-label, the Blue flag certification.

    Try this PYQ:

    Q. At one of the places in India, if you stand on the seashore and watch the sea, you will find that the seawater recedes from the shoreline a few kilometers and comes back to the shore, twice a day, and you can actually walk on the seafloor when the water recedes. This unique phenomenon is seen at:

    (a) Bhavnagar

    (b) Bheemunipatnam

    (c) Chandipur

    (d) Nagapattinam

    Which are the eight beaches?

    The eight beaches are Shivrajpur in Gujarat, Ghoghla in Daman & Diu, Kasargod and Padubidri beach in Karnataka, Kappad in Kerala, Rushikonda in Andhra Pradesh, Golden beach of Odisha and Radhanagar beach in Andaman and Nicobar.

    About Blue Flag Certification

    • This Certification is accorded by an international agency “Foundation for Environment Education, Denmark” based on 33 stringent criteria in four major heads i.e.
    1. Environmental Education and Information,
    2. Bathing Water Quality,
    3. Environment Management and Conservation and
    4. Safety and Services on the beaches.
    • It started in France in 1985 and has been implemented in Europe since 1987, and in areas outside Europe since 2001 when South Africa joined.
    • Japan and South Korea are the only countries in South and southeastern Asia to have Blue Flag beaches.
    • Spain tops the list with 566 such beaches; Greece and France follow with 515 and 395, respectively.

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  • Social Media: Prospect and Challenges

    Social media and dilemmas associated with it

    18 September 2020 | | Science and Technology
    Mains Paper 3: Social Media Networks & Internal Security

    Internet has transformed our life like no other technologies. However, it has created several problems as well. The article analyses such issues.

    Examining the role of social media

    • The first reason for the examination of role is the impending US presidential election.
    • Ghosts of Cambridge Analytica, are returning to haunt us again.
    • The second reason is the COVID pandemic.
    • Social media has emerged as a force for good, with effective communication and lockdown entertainment, but also for evil, being used effectively by anti-vaxxers and the #Unmask movement to proselytize their dangerous agenda.

    Understanding the problems associated with social media

    • The big problem with social networks is their business model.
    • The internet was created as a distributed set of computers communicating with one another, and sharing the load of managing the network.
    • This was Web 1.0, and it worked very well. But it had one big problem—there was no way to make money off it.
    •  The internet got monetized, Web 2.0 was born.
    • Come 2020, search and social media advertising has crossed $200 billion, rocketing past print at $65 billion, and TV at $180 billion.
    • This business model has led to a “winner-takes-all” industry structure, creating natural monopolies and centralizing the once-decentralized internet.
    • The emergence of Web 3.0, a revolution that promises to return the internet to users.

    Way forward

    • One principle of the new model is to allow users explicit control of their data, an initiative aided by Europe-like data protection regulation.
    • Another is to grant creators of content—artists, musicians, photographers, —a portion of revenues, instead of platforms taking it all (or most).
    • The technologies that Web 3.0 leverages are newer ones, like blockchains, which are inherently decentralized.
    • They have technology protection against the accumulation of power and data in the hands of a few.
    • Digital currencies enabled by these technologies offer a business model of users paying for services and content with micro-transactions, as an alternative to advertiser-pays.

    Conclusion

    The path to success for these new kinds of democratic networks will be arduous. But a revolution has begun, and it is our revulsion of current models that could relieve us of our social dilemmas.

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  • Coronavirus – Health and Governance Issues

    Power, problems and potential of federalism

    18 September 2020 | op-ed snap | Polity
    Mains Paper 2: Federalism

    The article analyses the issues of distribution of powers under the Constitution and the issues linked with it.

    Debate on the role of Centre and states

    • There is an argument for the need to re-examine the distribution of powers under the Seventh Schedule so as to rationalise the Centrally Sponsored Schemes (CSSs).
    • Under the Centrally Sponsored SchemesCentre extends support in sectors pertaining to the State List.
    • Spending by the Centre on a state subject like health and need for states’ contribute to a Union subject like defence is considered.
    • However, the constitutional assignments between the Centre and subnational governments in federations, are done broadly on the basis of their respective comparative advantage.
    • That is why the provision of national public goods is in the federal domain and those with the state-level public service span are assigned to the states.

    3 settled issues in the debate

    • The debate seems to have settled on at least three counts.
    • One, the federal organisation of powers can be revisited and reframed.
    • Two, the CSSs must continue but they should be restructured.
    • Three, there is a need for an appropriate forum to discuss the complex and contentious issue of reviewing federal organisation of powers and restructuring of central transfers.

    Review of the subjects in lists

    • In spite of health being a state subject, the response to collective threats linked to the subject required some kind of organisation of federal responsibilities on a functional basis.
    • A typical response is to recommend shifting subjects to the Concurrent List to enable an active role for the Centre.
    • The High-Level Group, constituted by the 15th Finance Commission, recommended shifting health from the State to the Concurrent List.
    • A similar recommendation was made earlier by the Ashok Chawla Committee for water.

    Challenges

    • Shifting of subjects from the State to Concurrent List in times of acute sub-nationalism, deep territorialisation and competitive federalism is going to be challenging.

    Way forward

    • The most collective threats and the challenges of coping with emerging risks of sustainability are linked to either the State List subjects or require actions by states — water, agriculture, biodiversity, pollution, climate change.
    • This extended role of ensuring security against threats to sustainability of resources forms a new layer of considerations.
    • This should define the contours of a coordinated response between the Centre and States — as it happened during the pandemic.
    • In fact, such threats and challenges require the states to play a dominant role.
    • At the same time, the Centre must expand its role beyond the mitigation of inter-state externalities and address the challenges of security and sustainability.

    Consider the question “The federal organisation of powers under the Constitution’s Seventh Schedule needs review. In light of this, examine the problems faced by the distribution and suggest the challenge the review would face.”

    Conclusion

    The ongoing friction between the Centre and the states over GST reforms tells us that consensus-building is not a one-time exercise. It has to allow sustained dialogue and deliberation. Perhaps it is time to revisit the proposal for an elevated and empowered Inter-State Council.

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