Archives: News

Tax Reforms

Excise Duty on Petrol and Diesel

Prelims Only | Economics | Mains Paper 3: Indian Economy
The Central levies on petrol and diesel were hiked amid sliding global crude oil prices. But the price of petrol and diesel registered a decline after oil companies further cut auto fuel prices in light of the substantial fall in global crude oil prices.

What is Excise Duty?
- Excise duty is a form of tax imposed on goods for their production, licensing and sale.
- It is the opposite of Customs duty in sense that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.
- At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc.
- Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.
Purview of excise duty
- The GST introduction in July 2017 subsumed many types of excise duty.
- Today, excise duty applies only on petroleum and liquor.
- Alcohol does not come under the purview of GST as exclusion mandated by constitutional provision.
- States levy taxes on alcohol according to the same practice as was prevalent before the rollout of GST.
- After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.
Types of excise duty in India

Before GST kicked in, there were three kinds of excise duties in India.

Basic Excise Duty
- Basic excise duty is also known as the Central Value Added Tax (CENVAT). This category of excise duty was levied on goods that were classified under the first schedule of the Central Excise Tariff Act, 1985.
- This duty was levied under Section 3 (1) (a) of the Central Excise Act, 1944. This duty applied on all goods except salt.
Additional Excise Duty
- Additional excise duty was levied on goods of high importance, under the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957.
- This duty was levied on some special category of goods.
Special Excise Duty
- This type of excise duty was levied on special goods classified under the Second Schedule to the Central Excise Tariff Act, 1985.
- Presently the central excise duty comprises of a Basic Excise Duty, Special Additional Excise Duty and Additional Excise Duty (Road and Infrastructure Cess) on auto fuels.
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Global Geological And Climatic Events

Earth’s spin has slowed over time

| Enviro & Biodiversity | Mains Paper 1: Geographical Features & Their Location
Earth spun 372 times a year 70 million years ago, compared to the current 365. This means the day was 23½ hours long, compared to 24 today.

Faster Earth in the olden days
- It has long been known that Earth’s spin has slowed over time.
- Previous climate reconstructions, however, have described long-term changes over tens of thousands of years.
- The new study looked at daily and annual variations in the mollusc shell.
About the Mollusc
- A mollusc is an invertebrate of a large phylum which includes snails, slugs, mussels, and octopuses. They have a soft unsegmented body and live in aquatic or damp habitats, and most kinds have an external calcareous shell.
- The ancient mollusc, Torreites Sanchez, belonged to an extinct group called rudist clams.
- At 70 million years ago, it belonged to the Late Cretaceous — it was around the time this epoch ended, some 65 million years ago, that dinosaurs went extinct.
How did researchers conclude this variation?
- Torreites sanchezi grew very fast, laying down daily growth rings.
- Using lasers on a single individual, scientists sampled tiny slices and counted the growth rings accurately.
- This allowed them to determine the number of days in a year 70 million years ago, and more accurately calculate the length of a day.
Significance of the research
- It is important to note that the period of Earth’s orbit has remained the same. In other words, one year 70 million years ago was as long as one year today.
- However, if there were a calendar then, the year would have been 372 “days” long, with each “day” half-an-hour shorter than one day today.
- Today, Earth’s orbit is not exactly 365 days, but 365 days and a fraction, which is why our calendars have leap years, as a correction.
The Moon’s retreat
- Friction from ocean tides, caused by the Moon’s gravity, slows Earth’s rotation and leads to longer days.
- And as Earth’s spin slows the Moon moves farther away at 3.82 cm per year.
- If this rate is projected back in time, however, the Moon would be inside the Earth only 1.4 billion years ago.
- This new measurement, in turn, informs models of how the Moon formed and how closes it has been to Earth over their 4.5-billion-year gravitational relationship.
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Innovations in Biotechnology and Medical Sciences

Role of Glucose in Regulating Liver Functions

Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields
A study by researchers from the Tata Institute of Fundamental Research, Mumbai (TIFR) has revealed that glucose in the body controls the function of SIRT1 enzymes directly.

What is SIRT1?
- SIRT1 is an enzyme that deacetylates (removal of acetyl) proteins which contribute to cellular regulation.
- A shortage or absence of the control by glucose may lead to a diabetic-like state, while excess feeding and sustained low levels of SIRT1 can lead to obesity and enhanced ageing.
- This information is expected to tackle lifestyle disorders and ageing-related diseases.
How do they function?
- In normal healthy individuals, SIRT1 protein levels are known to increase during fasting and decrease during the feed, which is essential to maintain a balance between glucose and fat metabolism.
- The glucose controls the functions of a protein SIRT1 which in turn maintains everyday feed-fast cycles and is also associated with longevity.
- The feed-fast cycle is a basic pattern and the metabolism-related to this is largely taken care of by the liver.
- Thus, the study shows that both over-activation and under-activation of SIRT1 can lead to diseases.
- Glucose puts a check on the activity of SIRT1 in the fed state. In the absence of this check, SIRT1 activity increases and results in hyperglycemia in a fasted state, mimicking diabetic state.
- The constant feeding or high-calorie intake that leads to a sustained reduction in the levels of SIRT1 by glucose which is associated with ageing and obesity.
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Port Infrastructure and Shipping Industry – Sagarmala Project, SDC, CEZ, etc.

Ro-Pax Ferry Service

PIB | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.
Mumbai – the first metropolitan city in India has introduced Ro-Pax service to its transport infrastructure. M2M1 Ferry Vessel has commenced operations between Mumbai and Mandwa.

Ro-Pax Ferry
- Ro-Pax Ferry is a ferry that combines the features of a cruise ship and a roll-on/roll-off service.
- This service has brought much to the relief of daily commuters, job seekers and holiday-goers travelling between Mumbai and Mandwa and also other parts of Alibaug.
- Ro-Pax service enables people to ferry along with their vehicles on board, between Mumbai and Mandwa.
- With this, Mumbai, Alibaug and the adjoining Konkan region will experience a boost in tourism, hinterland connectivity and also job opportunities.
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Foreign Policy Watch: India-United States

The ambit and the limits of ‘diaspora diplomacy’

| International Relations | Mains Paper 2: Indian Diaspora
Context

It is necessary for New India to look at the political choices of Indian migrants abroad through a more realistic lens.

Indian diaspora
- Largest diaspora and highest remittances: India has the world’s largest diaspora, about 17.5 million and receives the highest remittance of $78.6 billion from Indians living abroad (Global Migration Report 2020).
- Impact of the diaspora back home: Members of the diaspora, often seen as more “successful” and therefore more influential, can have a big impact on their relatives back home.
Certain wrong premises: The promise of the diaspora’s dual power is based on certain faulty premises.

1. Transferability of vote: To start with, the transferability of votes has not yet been proven conclusively.
- - It is necessary and timely that the government re-analyses the benefits accrued from the diaspora’s political presence through a more realistic lens.
  - One obvious reason is that the Indian community isn’t large enough to make a difference in the voting patterns in any of these countries.
  - The second is that the population that comes out for the rallies doesn’t represent the entire diaspora.
2. Not necessarily support the government: The second issue is that politically active members of the Indian diaspora don’t necessarily support the Indian government’s actions, and often because they are of Indian origin, hold the government in New Delhi to higher standards than they do others.
- Concern over CAA and Kashmir Issue: The U.S. House Foreign Affairs Committee Chairperson for Asia, Ami Bera, voiced his concerns quite plainly about Kashmir and Citizenship (Amendment) Act (CAA) during a visit to India last month.
- Criticism of the government actions: The sponsor of the U.S. House resolution on Kashmir (HR745) Pramila Jayapal; co-chair of U.S. Presidential candidate Bernie Sanders’s campaign Ro Khanna; and former presidential contender Kamala Harris, have all been openly critical of the government’s actions.
What should the government do? The conclusion for the government is that it cannot own only that part of the diaspora that supports its decisions, and must celebrate the fact that members of the Indian diaspora, from both sides of the political divide, are successful and influential.

3. Diaspora as a factor in bilateral relation: The government must ensure that its focus on the diaspora doesn’t become a factor in its bilateral relations.
- While it is perfectly legitimate and laudable to ensure the safety and well-being of Indian citizens in different parts of the world, it must tread more lightly on issues that concern foreign citizens of Indian origin.
4.Introduction of India’s internal politics:
- The introduction of India’s internal politics into this equation is another new angle, one that led the British Foreign Office to remonstrate with India about interference last December.
- Politically affiliated Indian diaspora chapters are now also playing old India-Pakistan fault-lines amongst immigrants, which in the past were fuelled by Pakistani agencies.
- In California primaries this month, local “Hindu-American” groups protested against Democratic candidates like Ro Khanna for joining the Congressional Pakistan caucus and for criticising New Delhi’s actions.
5. Impact on diaspora:
- Conflating POI with citizens of India: The government must consider the impact that policies conflating the PIOs with Indian citizens could have on the diaspora itself.
- Ability to assimilate: Most immigrant Indian communities have been marked by their ability to assimilate into the countries they now live in.
- Much of that comes from a desire to be treated as equal citizens, not as immigrants, while a few also have bad memories of anti-immigrant sentiments in the 1960s and 1970s in Europe and the U.S. when they were targeted and accused of “divided loyalties”.
Conclusion

Laying claim to diasporas kinship and culture and taking pride in their success is one thing. It would be a mistake to lay claim to their politics, however.
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Tuberculosis Elimination Strategy

A tale of two bugs

op-ed snap | Governance | Mains Paper 2: Health & Education
Context

India needs to take TB at the same level of seriousness at which it is dealing with the Covid-19.

Contrast and between the response
- Tuberculosis in India: Indians will still have to contend with other deadly respiratory tract infections which spread via airborne transmission. We will still have to contend with one particular bug which kills millions of us and which has been around for millennia. Tuberculosis.
  - But all comparisons between COVID-19 and TB end with the superficial observation that they are both deadly respiratory tract infections.
- Speedy tackling of COVID-19: COVID-19 began its march through humankind barely half a year ago and, in record time, scientists have identified the virus and hundreds of millions of dollars have been allocated to controlling its spread, developing vaccines (at last count, more than a dozen candidates) and testing medication regimens for those infected.
- Waning of the epidemic: While the virus has spread to over 100 countries, the epidemic already shows signs of waning in the Asian countries where it hit first and hardest.
Response to the TB
- How long has the TB infected us? On the other hand, TB is as old as humanity itself, infecting us for at least 5,000 years.
  - The infecting agent, a bacterium, was identified way back in 1882, by Robert Koch, signalling one of the landmark discoveries which laid the foundation of modern medicine.
- How was the response to TB? The subsequent response to this disease, which was infamously called the White Plague and was a leading cause of death globally at the start of the 20th century, is similar to what we see today for COVID-19, but played out over decades rather than months.
  - Measures taken: TB was made a notifiable disease, campaigns were launched to prohibit spitting and containment policies, including sequestering infected persons, were implemented.
- The first vaccine was produced over a hundred years ago, and the first curative treatments available by the 1950s.
- Divide between rich and poor in TB infections: TB was largely beaten in the rich world, not only because of these medical miracles but also thanks to the dramatic reduction in poverty and improvement in living standards.
  - There is compelling evidence that addressing these social determinants was even more impactful than medical interventions in the war against TB.
- The disease of squalor: TB has always been, and this is even more true now than ever before, a disease of poverty and squalor. And no country is more affected than India.
- Every TB statistic is grim:
  - We are home to 1 in 4 of the world’s TB patients.
  - Over 2.5 million Indians are infected.
  - In 2018, over 4,00,000 Indians died of the disease.
  - To put this in stark perspective, more people died of TB in India last week than the entire global death toll of COVID-19 to date.
  - Contrast with the response to COVID-19: Given our urgent, energetic and multifaceted response to the latter Covid-19, one is left wondering why we have failed so miserably for another bug, particularly one which has been around for so long, which has been exquisitely studied and characterised, which is preventable and treatable, and which most of the world has conquered.
Why TB has not been given such attention?
- It is because those who suffer from TB are not likely to be boarding international flights or passing through swanky airports to attend conferences.
- It is because TB infects people in slower tides, slow enough for industries to replace the sick with healthier recruits without endangering the bottom line.
- It is because TB does not threaten the turbines that keep the global economy throbbing.
- It is because TB no longer poses a threat to rich and powerful countries.
- It is because those who have TB live on the margins and have little political influence.
- It is because TB control requires society to address the squalid environments, which shroud the daily lives of hundreds of millions of Indians.
- It is because TB is a medieval scourge that reminds us of our shameful failure to realise a just, humane and dignified life for all our people.
Conclusion

If there is one lesson from COVID-19, it is that India, and the global community, has the political will, technical capacity and financial resources to act in a committed and concerted way to control infectious diseases. It needs to marshal these assets to eradicate TB, the most pernicious and pervasive infection of all, both through addressing its social determinants and scaling up effective biomedical interventions. But, for this to happen, we will have to be as concerned about the health needs of those who travel by foot and bicycle as we do for those who board cruise ships and international flights.
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Insolvency and Bankruptcy Code

The real reform

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

The IBC has started emerging stronger as it delivered on its promise, passed the constitutional muster, earned global recognition and became the preferred option for stakeholders in case of default.

Demystifying the myths surrounding IBC

Myths about recovery:

Most of the myths surround recovery. Consider the following example for quick appreciation.
- M/s. Synergies Dooray was the first company to be resolved under the IBC. It was with the Board of Industrial and Financial Reconstruction (BIFR) for over a decade.
- The realisable value of its assets was Rs 9 crore when it entered the IBC process. It, however, owed Rs 900 crore to the creditors.
- How much did IBC recover? The resolution plan yielded Rs 54 crore for them.
- Some condemned IBC because the resolution plan yielded a meagre 6 per cent of the claims of the creditors, disregarding the fact that they recovered 600 per cent of the realisable value of the company, which had been in the sick bed for over a decade.
- If the company was liquidated, assuming no transaction costs, the creditors would have got at best Rs 9 crore — 1 per cent of their claims.
The myth that recovery under IBC is dismal
- Let’s examine the myth that the recovery through resolution plans is dismal.
  - Two hundred companies had been rescued till December 2019 through resolution plans.
  - They owed Rs 4 lakh crore to creditors. However, the realisable value of the assets available with them, when they entered the IBC process, was only Rs 0.8 lakh crore.
  - The IBC maximises the value of the existing assets, not of the assets which do not exist. Under the IBC, the creditors recovered Rs 1.6 lakh crore, about 200 per cent of the realisable value of these companies.
  - Why creditors had to take a haircut? Despite the recovery of 200 per cent of the realisable value, the financial creditors had to take a haircut of 57 per cent as compared to their claims. This only reflects the extent of value erosion that had taken place when the companies entered the IBC process.
  - What is the conclusion? As compared to other options, banks are recovering much better through IBC, as per RBI data.
The myth that IBC is sending companies for liquidation:
- - What is the primary objective of IBC: Recovery is incidental under the IBC. Its primary objective is rescuing companies in distress.
  - More number of companies sent for liquidation: There is a myth that although the IBC process has rescued 200 companies, it has sent 800 companies for liquidation. The number of companies getting into liquidation is thus four times that of the companies being rescued.
  - The context for the numbers: Numbers, however, to be seen in context. The companies rescued had assets valued at Rs 0.8 lakh crore, while the companies referred for liquidation had assets valued at Rs 0.2 lakh crore when they entered the IBC process.
  - Looking from the value term angle: In value terms, assets that have been rescued are four times those sent for liquidation. It is important to note that of the companies rescued, one-third were either defunct or under BIFR, and of the companies sent for liquidation, three-fourths were either defunct or under BIFR.
The myth that IBC is resulting in huge job losses
- The next myth is that the IBC is resulting in huge job losses through liquidation. It is misconstrued that 600 companies — for which data are available and which have proceeded for liquidation — have assets (and consequently employment) at least equal to the aggregate claim of the creditors — Rs 4.6 lakh crore.
- Unfortunately, they have assets on the ground valued only at Rs 0.2 lakh crore.
  - Take the examples of Minerals Limited and Orchid Healthcare Private Limited, which have been completely liquidated. They owed Rs 8,163 crore, while they had absolutely no assets and employment.
  - What matters in this context is the assets a company has or the employment it provides — not how much it owes to creditors.
- The IBC process would release the idle or under-utilised assets valued at Rs 0.2 lakh crore, which would have dissipated with time, for business and employment.
- One also needs to consider the jobs saved through the rescue of 80 per cent of the distressed assets, and the job being created by these companies, post-rescue.
What changes IBC has brought?
- Changed the behaviour of debtors: A distressed asset has a life cycle. Its value declines with time if the distress is not addressed.
  - The credible threat of the IBC process, that a company may change hands, has changed the behaviour of debtors.
- Debtors are settling debt at an early stage: Thousands of debtors are settling defaults at the early stages of the life cycle of a distressed asset.
  - They are settling when the default is imminent, on receipt of a notice for repayment but before filing an application, after filing the application but before its admission, and even after admission of the application.
  - These stages are akin to preventive care, primary care, secondary care, and tertiary care with respect to sickness. Only a few companies, who fail to address the distress in any of these stages, reach the liquidation stage.
- Value erosion at the liquidation stage: The value of the company is substantially eroded, and hence some of them would be rescued, while others are liquidated.
  - The recovery may be low at this stage, but in the early stages of distress, it is much higher — primarily because of the IBC.
  - The percentage of companies or distressed assets getting into liquidation is insignificant.
  - Stakeholders should increasingly address the distress in the early stages and the best use of the IBC would be not using it all.
Conclusion

Stakeholders who understand business and have the backing of sophisticated professionals are using IBC with open eyes after evaluating all options. There is no reason to doubt their commercial wisdom. The 25,000 applications filed so far under IBC indicate the value and trust that stakeholders place on the law — the ultimate test of its efficacy.
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Capital Markets: Challenges and Developments

The circuit breaker in the stock market

| Economics | Mains Paper 3: Indian Economy
The stock markets in India are witnessing historic single-day falls with an increase in the number of COVID-19 cases. Since the indexes plunged more than 10 per cent each day earlier, a circuit breaker was triggered for the first time since 2009 halting trading.

What are circuit breakers?
- In June 2001, the SEBI implemented index-based market-wide circuit breakers.
- Circuit breakers are triggered to prevent markets from crashing, which happens when market participants start to panic induced by fears that their stocks are overvalued and decide to sell their stocks.
- This index-based market-wide circuit breaker system applies at three stages of the index movement, at 10, 15 and 20 per cent.
- When triggered, these circuit breakers bring about a coordinated trading halt in all equity and equity derivative markets nationwide.
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New Species of Plants and Animals Discovered

Oculudentavis khaungraae

Prelims Only | Trivia | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia
Scientists have found the skull of a 99-million-year-old flying dinosaur that is tinier than the tiniest bird known to humans.
- The bird-like dinosaur was found stuck in a gob of tree resin that eventually hardened into amber, preserving it for millions of years to come.
- The fossil was dug up in 2016 from a mine in Myanmar. It was so slight; it likely weighed just 2 grams.
- The dinosaur skull holds around 100 sharp teeth, which hints at its ferocious nature despite its small size.
- It even had teeth in the back of its jaw, under its eye.
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Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

Social Distancing and Flattening the Curve

Explained | Science Tech | Mains Paper 3: Awareness in various sc and tech fields
The last two days, a number of states in India have enforced measures aimed at reducing public gatherings. This is called “social distancing”.

How does social distancing work?
- To stem the speed of the coronavirus spread so that healthcare systems can handle the influx, experts are advising people to avoid mass gatherings.
- Offices, schools, concerts, conferences, sports events, weddings, and the like have been shut or cancelled around the world, including in a number of Indian states.
- An advisory by the US Centers for Disease Control recommends social distancing measures such as: reducing the frequency of large gatherings and limiting the number of attendees; limiting inter-school interactions; and considering distance or e-learning in some settings.
What is the objective of such restrictions?
- Compared to deadlier diseases such as bird flu, or H5N1, coronavirus is not as fatal —which ironically also makes it more difficult to contain.
- With milder symptoms, the infected are more likely to be active and still spreading the virus.
- For example, more than half the cases aboard a cruise ship that has docked in California did not exhibit any symptoms.
- In a briefing on March 11, WHO officials said, “Action must be taken to prevent transmission at the community level to reduce the epidemic to manageable clusters.”
- The main question for governments is to reduce the impact of the virus by flattening the trajectory of cases from a sharp bell curve to an elongated speed-bump-like curve.
- This is being called “flattening the curve”. How does ‘flattening the curve’ help?
- Limiting community transmission is the best way to flatten the curve.
What was the curve like in China?
- The numbers show that the virus spread within Hubei exponentially but plateaued in other provinces.
- Some say it’s because many of these countries learnt from the 2003 SARS epidemic.
- Just as Chinese provinces outside of Hubei effectively stemmed the spread in February, three other countries —South Korea, Italy, and Iran — were not able to flatten the curve.
Flattening The Curve
- In epidemiology, the idea of slowing a virus’ spread so that fewer people need to seek treatment at any given time is known as “flattening the curve.”
- It explains why so many countries are implementing “social distancing” guidelines — including a “lockdown” order that affects 1.3 billion people in India, even though COVID-19 outbreaks in various places might not yet seem severe.
What is the curve?
- The “curve” researchers are talking about refers to the projected number of people who will contract COVID-19 over a period of time.
- To be clear, this is not a hard prediction of how many people will definitely be infected, but a theoretical number that’s used to model the virus’ spread. Here’s what one looks like:
- The curve takes on different shapes, depending on the virus’s infection rate.
- It could be a steep curve, in which the virus spreads exponentially (that is, case counts keep doubling at a consistent rate), and the total number of cases skyrockets to its peak within a few weeks.
- Infection curves with a steep rise also have a steep fall; after the virus infects pretty much everyone who can be infected, case numbers begin to drop exponentially, too.
- The faster the infection curve rises, the quicker the local health care system gets overloaded beyond its capacity to treat people.
- As we’re seeing in Maharashtra or Ahmedabad, more and more new patients may be forced to go without ICU beds, and more and more hospitals may run out of the basic supplies they need to respond to the outbreak.
- A flatter curve, on the other hand, assumes the same number of people ultimately get infected, but over a longer period of time.
- A slower infection rate means a less stressed health care system, fewer hospital visits on any given day and fewer sick people being turned away.
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Types of excise duty in India

Flattening The Curve

What is the curve?

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