The 54th GST Council meeting, chaired by Union Finance Minister was held recently.
Recommendations from the 54th GST Council Meeting:
GST Rate Changes for Goods
Namkeens and Savory Products
GST on extruded/expanded savoury products reduced from 18% to 12%; 5% GST on un-fried or uncooked snack pellets continues.
Cancer Drugs
GST on cancer drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab reduced from 12% to 5%.
Metal Scrap
Reverse Charge Mechanism (RCM) introduced for metal scrap supplies by unregistered persons; 2% TDS applied on B2B metal scrap supplies by registered persons.
RMPU Air Conditioning Machines
RMPU air conditioning machines for railways classified under HSN 8415, attracting a 28% GST rate.
Car and Motorcycle Seats
GST on car seats (HSN 9401) increased from 18% to 28%, aligning with the rate for motorcycle seats.
GST Rate Changes for Services
Life and Health Insurance
Group of Ministers (GoM) to be constituted to study GST issues related to life and health insurance. Report expected by October 2024.
Transport by Helicopters
GST on passenger transport by helicopters (seat share basis) set at 5%; 18% GST continues for charter helicopter services.
Flying Training Courses
DGCA-approved flying training courses conducted by Flying Training Organizations (FTOs) will be exempt from GST.
Preferential Location Charges
Preferential Location Charges (PLC) in construction services to be taxed as composite supply.
Affiliation Services
Affiliation services provided by boards like CBSE taxable; services provided to government schools by state/central boards will be exempt.
Import of Services by Branches
Import of services by foreign airlines’ branch offices from related persons will be exempt from GST if made without consideration.
Compliance Measures
B2C E-invoicing
Pilot project for B2C e-invoicing introduced to improve business efficiency and environmental sustainability.
Invoice Management System (IMS)
Invoice Management System to allow taxpayers to accept, reject, or keep invoices pending for claiming Input Tax Credit (ITC).
Waiver of Interest/Penalty
Special procedure to waive interest/penalty for tax demands from FY 2017-18, 2018-19, and 2019-20 under section 73 of CGST Act.
Clarifications via Circulars
Clarifications on place of supply for advertising services, ITC on demo vehicles, and place of supply for data hosting services to be issued.
PYQ:
[2018] Consider the following items:
1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material
Which of the above items is/are exempted under GST (Goods and Services Tax)?
Q Can the strategy of regional-resource-based manufacturing help in promoting employment in India?(UPSC IAS/2019)
Q “Success of the ‘Make in India’ program depends on the success of the ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments. (UPSC IAS/2015)
Q “While we flaunt India’s demographic dividend, we ignore the dropping rates of employability.” What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain (UPSC IAS/2014)
Prelims: Priority Sector Lending by banks in India constitutes the lending to: (UPSC IAS/2013) (a) Agriculture (b) Micro and small enterprises (c) Weaker sections (d) All of the above
Mentor comment: Chinese smartphone companies dominate the Indian market, holding over 50% share by 2023. Now, the Indian government aims to balance local manufacturing and Chinese investments. However, there are challenges which include the lack of a robust supply chain and ancillary industries in India. To solve this issue at this point in the geopolitical situation, complete self-reliance on smartphones is difficult in the short term period for India. On the same note, today’s editorial discusses the complex relationship between India and Chinese companies, particularly in the context of the “Make in India” initiative.
_
Let’s learn!
Why in the News?
The Indian government is considering allowing certain Chinese investments in high-tech electronics on a case-by-case basis, especially in areas like compressors, display panels, and semiconductors.
According to the International Data Corporation’s WorldwideQuarterly Mobile Phone Tracker, four of the top five best-selling smartphone brands were Chinese at the end of 2023.
The dilemma between ‘Make in India’ and China’s presence:
About ‘Make in India’ Initiative: ◉ The Make in India initiative was launched in 2014 to promote India as a global manufacturing destination. ◉ The initiative aims to increase India’s manufacturing sector’s contribution to GDP to 25% by 2025.
The ‘Make in India’ aimed to represent India’s strength in manufacturing and National pride, but the Chinese smartphone companies have emerged as significant beneficiaries of this initiative, becoming dominant players over the past decade.
The widespread use of Android smartphones in India, with a market share of about 70%, has favored Chinese brands, increasing their consumer base.
Chinese companies have navigated fluctuations in India-China relations, maintaining their market presence until the Galwan Valley incident in 2020.
Initiatives Taken for Indianization in the Economy:
By Private Players: As a contract manufacturer, Tata Electronics has emerged as a key player in the Indian smartphone manufacturing landscape by replacing Wistron (Taiwanese suppliers for Apple).
The company also aims to develop local capabilities and reduce dependency on imports by creating high-precision machinery for smartphone components.
Adaptation of Chinese Companies: Chinese smartphone companies are adapting by complying with Indian government regulations, introducing Indian distributors, and streamlining their operations.
They are teaming up with domestic manufacturers to benefit from the Production Linked Incentive (PLI) scheme and increasingly seeking equity partners to strengthen their presence in India.
Production Linked Incentive Scheme:
◉ It is a form of performance-linked incentive to give companies incentives on incremental sales from products manufactured in domestic units. It is aimed at boosting the manufacturing sector and to reduce imports. ◉ In 2021, the Government announced the PLI scheme for 13 key sectors:Auto components, Automobile, Aviation, Chemicals, Electronic systems, Food processing, Medical devices, Metals & mining, Pharmaceuticals, Renewable energy, Telecom, Textiles & apparel, and white goods. ◉ In Budget 2024-25, these incentives were extended to more sectors, such as the small and medium-sized enterprise (SME) sector to participate in the global market. A portion of incentives could be allocated for skill training and capacity building.
Challenges for complete Indianisation:
Need for Infrastructure Development: Manufacturing all smartphone components in India requires a robust supplier network, technological knowledge-sharing clusters, and improvements in power supply and workforce conditions.
Current Limitations: India currently lacks the necessary infrastructure at scale to support complete local manufacturing of smartphone components.
Technology Sharing Reluctance: Chinese companies are hesitant to share technology without clear equity arrangements, complicating the Indianisation efforts.
Way Forward:
Address Skill Gaps: Collaborate with educational institutions to ensure that the workforce is equipped with relevant skills in engineering, electronics, and automation.
Streamline Regulatory Processes: Provide clear regulatory guidelines to create a business-friendly environment that encourages investment.
Enhance Local Manufacturing Capabilities: Foster innovation and support startups in the electronics sector to create a diverse manufacturing ecosystem and reduce dependency on imports and enhance value addition in smartphone manufacturing.
Attract Foreign Investments: Continue offering incentives, subsidies, and tax breaks to attract foreign smartphone manufacturers to set up operations in India.
Primary care remains underdeveloped, while the private sector has seen significant growth in secondary and tertiary care.
What are the major necessities in Public Health?
Diseases of Poverty: This includes health issues predominantly affecting the poor and vulnerable populations, such as tuberculosis, malaria, undernutrition, maternal mortality, and illnesses caused by food and water-borne infections like typhoid and diarrheal diseases.
Addressing these needs is critical not only from a health perspective but also as a matter of human rights.
Middle-Class Health Concerns: The second category focuses on health issues related to environmental pollution, including air and water quality, waste management, and food safety.
These issues are often exacerbated by inadequate infrastructure and poor market regulations, leading to chronic illnesses and road traffic accidents.
Curative Care Needs: The most visible public health needs are those related to curative care, which is divided into three levels: primary, secondary, and tertiary care.
The poor often rely on public primary health care for affordable services, while secondary care remains historically neglected.
Tertiary care is primarily addressed through government schemes like the Pradhan Mantri Jan Arogya Yojana (PMJAY) under Ayushman Bharat, aimed at providing coverage for serious health issues.
How do the private hospitals become a real beneficiary in present times?
Limited Coverage: India’s health insurance primarily covers only hospitalisation expenses, leaving out outpatient and primary care services. This benefits private hospitals as they can monopolise high-cost medical treatments, while the larger uninsured population faces commercialised care at market rates.
Weakening of Public Health Sector: The government’s shift in focus from strengthening public sector health care to outsourcing via insurance schemes like PMJAYindicates a failure to build adequate secondary and tertiary public health services.
Threats to Public Healthcare:
Neglect of Secondary and Tertiary Care: The inadequate investment in strengthening secondary- and tertiary-level health care in the public sector, leads to a reliance on private hospitals.
Transformation of Primary Health Centres (PHCs) and Sub-centres: The conversion of sub-centres and PHCs into Health and Wellness Centres (HWCs) has undermined their original role in preventive and promotive health care.
Loss of Trust in Public Healthcare: Due to overcrowding, poor infrastructure, and inadequate funding, public health institutions are losing credibility. Coupled with the commercial interests of private providers, this creates a dual crisis of access and quality in the healthcare system.
Rebranding of Health Centres: The recent renaming of HWCs as “Ayushman Arogya Mandirs” raises concerns about cultural relevance and secularism in public health institutions, especially for non-Hindi-speaking populations, further undermining trust in the system.
Way forward:
Strengthen Public Healthcare Infrastructure: Invest in enhancing secondary and tertiary care facilities in the public sector to reduce dependence on private hospitals.
Integrate Health Insurance and Primary Care: Expand health insurance coverage to include outpatient and primary care services, and ensure that public health centers retain their focus on preventive and promotive care.
Mains PYQ:
Q Public health system has limitation in providing universal health coverage. Do you think that private sector can help in bridging the gap? What other viable alternatives do you suggest? (UPSC IAS/2015)
A rare August cyclone, named ‘Asna’, currently positioned off the Kutch coast is even more remarkable for having originated over land.
Why was there a lot of excitement over Asna?
“Asna” is notable because it’s the first cyclone in August in the North Indian Ocean since 1981. August is typically not part of the cyclone season in this region.
The cyclone began as a land-born depression that intensified as it moved over the warm waters of the Arabian Sea. It formed from a rare strong low-pressure system that grew unusually powerful over land.
Asna’s formation is linked to the broader context of rapid warming over the Arabian Sea, influenced by climate change. The northward shift of the low-level jet stream due to warming over West Asia contributed to its development.
Why does the North Indian Ocean have two cyclone seasons?
The North Indian Ocean has two distinct cyclone seasons due to the unique monsoonal circulation patterns in the region:
Pre-monsoon season (March-May): The Arabian Sea warms rapidly during this time as the sun crosses over to the Northern Hemisphere. The Bay of Bengal is relatively warmer and begins producing atmospheric convection and rainfall. This leads to cyclogenesis in both the Arabian Sea and the Bay of Bengal.
Post-monsoon season (October-December): This is the northeast monsoon season for India. The Arabian Sea cools due to the strong southwesterly winds and mixing of cold subsurface waters. However, the Bay of Bengal remains favourable for cyclogenesis. The post-monsoon season is the major cyclone season in the North Indian Ocean
How is climate change affecting the region?
Warming of the Indian Ocean: Climate change is amplifying the warming of the Indian Ocean, with more heat being transferred from the Pacific Ocean and Southern Ocean. This increases the overall sea surface temperature (SST), crucial for cyclone formation.
Monsoon and cyclones: The warming affects the monsoon patterns and has the potential to change cyclone intensity. More heat and moisture from the warming seas lead to more energy available for cyclones.
Impact on global ocean circulation: The warming of the Indian Ocean is also affecting global ocean currents, impacting heat uptake by the Pacific Ocean and water sinking in the North Atlantic. The Indian Ocean is playing a central role in global climate change processes.
Way forward:
Strengthening Early Warning Systems: Enhance real-time monitoring and forecasting of cyclones, particularly in the pre- and post-monsoon seasons, using satellite data and advanced models.
Building Climate Resilience: Implement climate adaptation strategies, especially for coastal communities, by improving infrastructure and disaster preparedness to cope with increasing cyclone intensity due to climate change.
Mains PYQ:
Q Discuss the meaning of colour-coded weather warnings for cyclone prone areas given by India Meteorological Department. (UPSC IAS/2022)
On Thursday, the ESA-Japan spacecraft “BepiColombo” made its closest approach to Mercury, capturing detailed images of its sunrise-lit surface and revealing the planet’s south pole.
Highlights of the Latest Flyby:
BepiColombo uses flybys of Earth, Venus, and Mercury to slow down and enter orbit around Mercury. This approach gives scientists new information about Mercury’s south pole and its unusual peak ring craters, which haven’t been studied much before.
Note: Flybys are close passes of a spacecraft near a planet or celestial body
About BepiColombo Mission:
Details
Collaboration
European Space Agency (ESA) and Japan Aerospace Exploration Agency (JAXA)
Launch Date
October 20, 2018
Expected to enter Mercury’s orbit by late 2026.
Launch Vehicle
Ariane 5 Rocket
Objectives
Study Mercury’s magnetic field
Investigate surface composition and geology
Analyze Mercury’s interaction with solar wind
Study exosphere and geological history
Spacecraft Components
ESA’s Mercury Planetary Orbiter (MPO): Focus on surface and interior study
JAXA’s Mercury Magnetospheric Orbiter (MIO): Focus on magnetic field and surrounding space
Planned Flybys
6 (Flybys of Earth, Venus, and Mercury)
Ongoing, with 4 out of 6 Mercury flybys completed
Craters Studied
Vivaldi Crater, Stoddart Crater
Significance
Second mission ever to orbit Mercury (after NASA’s Messenger, 2004)
Challenges
Mercury’s proximity to the Sun accelerates spacecraft, requiring multiple flybys to slow down
Thruster issues causing mission delay
PYQ:
[2008] What is the purpose of the US Space Agency’s Themis Mission, which was recently in the news?
(a) To study the possibility of life on Mars.
(b) To study the satellites of Saturn.
(c) To study the colourful display of high latitude skies.
(d) To build a space laboratory to study the stellar explosions.
Two NASA astronauts aboard Boeing’s Starliner will remain on the International Space Station (ISS) for an extended period due to issues with a faulty propulsion system, including helium leaks.
About Helium
Helium is inert, meaning it does not react or combust when exposed to other substances.
This makes it ideal for pressurization and cooling systems in rockets and spacecraft.
With an atomic numberof2, Helium is second lightest element after hydrogen, helping to keep the rocket’s weight low, which is crucial for achieving the necessary speeds and altitudes to reach orbit.
It has an extremelylow boiling point (-268.9°C), allowing it to stay in a gaseous state in super-cold environments, where many rocket fuels are stored.
Though non-toxic, helium cannot be inhaled on its own as it displaces oxygen, which is vital for human respiration.
How is Helium used for space applications?
Fuel Tank Pressurization: Helium pressurizes fuel tanks, ensuring a consistent flow of fuel to the rocket’s engines, even as the fuel is burned.
Cooling Systems: It also plays a key role in cooling systems, particularly in environments where rocket fuel and oxidizer need to be stored at extremely low temperatures.
Maintaining Tank Pressure: As fuel and oxidizer are consumed, helium fills the empty space left behind, ensuring the overall pressure inside the tanks remains stable.
Is Helium prone to leaks?
Helium’s small atomic size and low molecular weight make it prone to leaking through tiny gaps or seals in storage tanks and fuel systems.
Since helium is rare in Earth’s atmosphere, even minor leaks are easily detectable, making it a valuable tool for spotting potential faults in spacecraft fuel systems.
Examples of Leaks:
In May, hours before Boeing’s Starliner spacecraft attempted its first astronaut launch, sensors detected a small helium leak in one of its thrusters.
After Starliner launched in June, additional leaks were found in space, prompting NASA to return the spacecraft to Earth without its crew.
Alternatives to Helium
Argon and Nitrogen: Some rocket launches have experimented with other inert gases like argon and nitrogen, which are sometimes cheaper, but helium remains the industry standard.
Ariane 6’s Novel System: Europe’s new Ariane 6 rocket abandoned helium in favor of a pressurization system that converts small amounts of its liquid oxygen and hydrogen into gas for pressurizing the fuel.
However, during Ariane 6’s debut launch, this system failed in space, adding to the global rocket industry’s pressurization challenges.
PYQ:
[2012] A team of scientists at Brookhaven National Laboratory included those from India created the heaviest anti-matter (anti-helium nucleus). What is/are the implication/implications of the creation of anti-matter?
1. It will make mineral prospecting and oil exploration easier and cheaper.
2. It will help prove the possibility of the existence of stars and galaxies made of anti-matter.
3. It will help understand the evolution of the universe.
Select the correct answer using the codes given below:
The Union Home Affairs Ministry has notified the auction of land in Uttar Pradesh previously owned by the family of former Pakistan President Pervez Musharraf.
Enemy Properties in India
Details
Definition
Assets (movable and immovable) and properties of individuals or entities from countries at war with India, vested with CEPI.
History
Concept initiated after India-Pakistan wars (1965 & 1971) and the 1962 Sino-Indian war.
Q What were the reasons for the introduction of Fiscal Responsibility and Budget Management (FRBM) Act, 2013? Discuss critically its salient features and their effectiveness. (UPSC IAS/2018)
Q The public expenditure management is a challenge to the Government of India in the context of budget making during the post-liberalization period. Clarify it. (UPSC IAS/2019)
Q How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position? (UPSC IAS/2021)
Mentor comment: Fiscal deficit is considered a problem in India because it leads to increased government borrowing, which can raise public debt to unsustainable levels. This borrowing often crowds out private investment by driving up interest rates, making it more expensive for businesses to borrow. Additionally, financing the deficit by printing money can lead to inflation, eroding consumers’ purchasing power. It also places a burden on future generations, who will have to pay off the debt. In today’s editorial, we will be having a look on how the high fiscal deficits can undermine investor confidence, potentially resulting in credit downgrades and higher borrowing costs.
_
Let’s learn!
Why in the News?
The FM in the Union Budget of 2024-25 stated that, from 2026-27 onwards, Indian govt will focus to reduce the fiscal deficit each year to ensure that the debt declines as a percentage of GDP.
The speech also says that the Centre’s fiscal deficit would be reduced to 4.5% of GDP in 2025-26 from its budgeted level of 4.9% in 2024-25.
About the Fiscal Deficit: • Fiscal Deficit is excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. • Fiscal Deficit = Total Expenditure – (Revenue Receipts + Non-Debt Creating Capital Receipts).
What is the National Debt? • The national debt is the total amount of money that the government owes to its lenders at a particular point in time. It is different from the fiscal deficit. • In simple, it is the amount of debt that has accumulated by the government over many years of running fiscal deficits and borrowing to bridge the deficits.
What are the implications of the Fiscal deficit?
Negative Implications:
Inflationary Pressure: When a country’s government runs a persistently high fiscal deficit, this can eventually lead to higher inflation as the government will be forced to use fresh money issued by the central bank to fund its fiscal deficit.
It also eventually leads to a higher ratio of interest payments to revenue receipts. Hence there will be lower shares for financing non-interest expenditures.
Crowding Out effect: When the government borrows a large portion of available funds from financial markets to finance its deficit, it crowds out private investment with reduced access to credit for businesses and individuals.
This can hinder economic growth and productivity.
Reduced Fiscal Space: A high fiscal deficit limits the government’s ability to respond to economic shocks or crises.
With limited fiscal space, the government may be unable to implement countercyclical fiscal policies such as increased spending or tax cuts to stimulate economic growth during downturns.
Difficulty in borrowing: As a government’s finances worsen, demand for the government’s bonds begins to drop, forcing the government to offer to pay a higher interest rate to lenders.
Positive Implications of Lower Fiscal Deficit:
Improve Credit Ratings: Higher credit ratings make it cheaper for India to borrow in global markets, reducing the cost of external debt.
Enhance the space for development: Less money is diverted to debt servicing while the fiscal deficit is lower, which leaves more funds for development projectslike infrastructure, education, and healthcare.
This can enhance investor confidence,leading to increased foreign and domestic investment.
Improve the Balance of Payment: Lower deficits will be reducing the reliance on foreign borrowing. It will help in stabilizing the exchange rateand the overall current account.
What are the reforms needed?
Infrastructure Finance Reforms: Improving mechanisms for financing infrastructure projects by involving the private sector through public-private partnerships (PPP), infrastructure bonds, and development of finance institutions.
Recommendations: The NK Singh committee in 2017proposed a draft Debt Management and Fiscal Responsibility Bill, 2017 which need to be implemented comprehensively.
Incentivizing Financial Savings: Promoting higher household financial savings through tax incentives on financial products, improving returns on long-term savings schemes, and enhancing financial literacy.
A new study published in the peer-reviewed “journal Nature” has found that the construction of toilets under the government’s “Swachh Bharat Mission” helped prevent approximately 60,000 to 70,000 infant deaths annually between 2011 and 2020.
Key Highlights of the Report:
Impact of SBM: The study revealed that districts with over 30% toilet coverage under SBM experienced reductions of 5.3 in the Infant Mortality Rate and 6.8 in the Under Five Mortality Rate per thousand live births.
Over 9.5 crore toilets being built across the country since 2014;
564,658 villages being declared Open Defecation Free (ODF);
30 States/UT’s being 100% covered with individual household latrines (as of 2019).
Unique Approach of SBM: The approach of combining toilet construction with substantial investments in IEC (Information, Education, and Communication) and community engagement represents a marked departure from traditional efforts in India.
Novel Evidence of Impact: The study provides novel evidence of reductions in infant and child mortality following SBM’s comprehensive national sanitation program, indicating its transformative role in improving public health outcomes.
Asian Enigma: The report touches on the “Asian Enigma,” which highlights persistently high levels of undernutrition and stunting among children despite sufficient food availability, linking it to poor sanitation practices and open defecation.
Successful Journey since Inception (2014-present):
Phase I (2014): The SBM 1.0 aimed to make urban centers open-defecation-free and improve sanitation infrastructure, particularly toilets.
The mission targeted constructing household, community, and public toilets, converting insanitary latrines, and improving solid-waste management.
Phase II (2020): The SBM 2.0 commenced in 2020, and is expected to run till 2025-26. It aims to sustain the achievements of phase I and ensure that treatment of both liquid and solid waste is achieved through the help of technology and private sector engagement.
This will focus on making Indian cities garbage-free by improving scientific waste management systems.
Way forward:
Global Model for Sanitation: India’s national sanitation campaign under SBM could serve as a model for other low- and middle-income countries where sanitation remains a major public health challenge.
Focus on Behavioral Change: Alongside infrastructure development, efforts are needed to sustain behavioural changes to eliminate open defecation.
Expand Sanitation Infrastructure in Rural Areas: Prioritize extending sanitation coverage and scientific waste management systems to underserved rural regions, building on the success of SBM to reduce mortality further and improve public health.
![[9th September 2024] The Hindu Op-ed: With or without Chinese companies is the question](https://www.civilsdaily.com/wp-content/uploads/2024/09/9-SEP-1-1568x882.jpg)
![[7th September 2024] The Hindu Op-ed: Stick to fiscal deficit as the norm for fiscal prudence](https://www.civilsdaily.com/wp-content/uploads/2024/09/7-SEP-1-1568x882.jpg)
