From UPSC perspective, the following things are important :
Prelims level: Direct and indirect taxes
Mains level: Paper 3- Increasing proportion of indirect taxes in India and issues with it
India, with a tax-GDP ratio of 10.9 per cent in 2019 needs an overhaul of its tax system. This article analyses India’s growing dependence on indirect taxes and its implications for the poor.
Important changes in direct taxes
The wealth tax was abolished in 2016.
Wealth tax was replaced by a 2 per cent surcharge on super-rich individuals with taxable income of over Rs 10 crore.
But the government rolled back the increase in surcharge in 2019.
Corporate taxes were slashed from 30 per cent to 22 per cent to attract foreign investors and induce Indian companies to invest.
Cuts in corporate tax that have resulted in a revenue loss of Rs 1.5 lakh crore have contributed to making the state poor.
Increasing indirect taxes and cess
The share of indirect taxes has increased by up to 50 per cent of the gross tax revenue in FY2019 from 43 per cent in FY2011.
The combined share of customs and excise duties and value-added tax reached an all-time high of 10.5 per cent of GDP.
This high was following a three-year-long steady increase in customs or excise duty on commonly used goods, such as petroleum products, metals and sugar, automobiles and consumer durables.
This is also when the service tax was hiked steadily to 18 per cent under GST from 12.4 per cent in 2014.
Swachh Bharat cess and Krishi Kalyan cesses were imposed in addition to GST.
The permanent nature of these cesses has been widely opposed by the states and criticised by the CAG.
CAG has pointed out the lack of transparency and incomplete reporting in accounts on the utilisation of amounts collected under cesses.
All of this is troubling because indirect taxes often penalise the poor and the middle class more than the rich.
Case for the wealth tax
High tax rates on the wealthy in Europe have played a key role in ensuring a strong social security net for the poor.
This successful example should encourage India to consider the rationale for a wealth tax.
Higher taxes on the super-rich could be used for cash transfers and a fiscal stimulus, that, in India, at 1 per cent of GDP each, have been negligible so far.
A wealth tax, a COVID-19 cess on the super-rich and a surcharge on the super-rich for their income from listed equity shares are critical for mitigating the current situation.
Issues with such policy
Cuts in corporate taxes, increased indirect tax revenues, decreased capital expenditure and practically no change in revenue expenditure on health and education show that India’s taxation policy is more business-friendly than pro-poor.
This is happening at a time when a supply-side oriented approach to the economy is counter-cyclical.
Faced with increased expenditure amid pandemic Centre increased the duty on fuel by a record Rs 10 per litre on petrol when global crude prices have been falling.
This speaks of the government’s increased dependency on indirect tax-based revenues.
Examine the implications of India’s growing dependence on indirect tax revenue? Suggest the measures to reduce such dependence.
Conclusion
COVID-19 may be a blessing in disguise if it allows India to reform its tax system in order to make it work towards inclusive growth and sustainable development rather than targeting only investment-led economic growth.
bACK 2 BASICS
GO THROUGH THE ARTICLE BELOW FOR MORE INFORMATION ON TAXATION:
From UPSC perspective, the following things are important :
Prelims level: BoP, BoT, Current Account
Mains level: BoP Crisis
India’s balance of payments this year is going to be “very very strong” on the back of significant improvement in exports and a fall in imports said the Commerce and Industry Ministry.
Try this PYQ:
Q.In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? (CSP 2019)
The foreign currency earnings of India’s IT sector
Increasing the government expenditure
Remittances from Indians abroad
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
Balance of Payment
BOP is the oldest and the most important statistical statement for any country.
In a nutshell BOP of a country is “a systematic record of all economic transactions between the residents of one country with the residents of the other country in a financial year”.
Economic Transactions include all the foreign receipts and payments made by a country during a given financial year.
Foreign receipts include all the earnings and borrowings by a country from the other countries.
From UPSC perspective, the following things are important :
Prelims level: Indus River Systems
Mains level: Indus Water Treaty and its significance
India has refused a request by Pakistan to hold a meeting on issues around the Indus Water Treaty (IWT) at the Attari check post near the India-Pakistan border.
The IWT has been in existence since 1960, and reached a flash point in the aftermath of the Uri attacks in 2016 with PM declaring that “blood and water couldn’t flow together”.
About Indus Waters Treaty, 1960
The IWT 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.
Talks stalled on key projects
Among the key points on the table was evolving a procedure to solve differences on technical aspects governing the construction of the Ratle run-of-the-river (RoR) project on the Chenab in the Kishtwar district.
India has called for the appointment of a ‘neutral’ party while Pakistan favours a Court of Arbitration to agree upon a final resolution on the design parameters of this hydropower project.
According to the IWT, India has the right to build RoR projects on the three ‘western’ rivers — the Chenab, Jhelum and Indus — provided it does so without substantially impeding water flow in Pakistan downstream.
Pakistan believes that the project’s current design does pose a serious impediment and has told the World Bank that it wants a Court of Arbitration (CoA) set up to decide on the issue.
India says this is only a technical issue and mutually solvable.
The Defence Ministry announced a list of 101 items that it will stop importing.
Try this question for mains:
Q.Being one of the top importers of defence equipment India is well placed to enhance its domestic manufacturing capacity of defence equipment. Yet, India lacks it after repeated attempts to achieve it. Examine the reasons for this and suggest measures to overcome this anomaly.
Negative Imports List
The negative list essentially means that the Armed Forces—Army, Navy and Air Force—will only procure all of these 101 items from domestic manufacturers.
The manufacturers could be private sector players or Defence Public Sector Undertakings (DPSUs).
Why such a decision?
Reduce imports: As per the Stockholm International Peace Research Institute, which tracks defence exports and imports globally, India has been the second-largest importer between 2014 and 2019 with US$ 16.75 billion worth of imports.
Boost domestic industry: By denying the possibility of importing the items on the negative list, the domestic industry is given the opportunity to step up and manufacture them for the needs of the forces.
Boost exports: The government has been hoping that the defence manufacturing sector can play a leading role in boosting the economy, not just for the domestic market, but to become an exporter as well.
Items included in the negative list
The items mentioned in the negative imports list include:
water jet fast attack craft to survey vessels, pollution control vessels, light transport aircraft, GSAT-6 terminals, radars, unmanned aerial vehicles, to certain rifles, artillery guns, bulletproof jackets, missile destroyers, etc.
Impact of the move
The items in the list are of proven technologies and do not involve any critical or cutting-edge technology for a next-generation weapon system or platform.
Little benefits for domestic players in short-run: Against each of these items are mentioned a year when import embargo would kick in, leading to apprehensions that demands will be placed with foreign vendors until then, leaving very little for domestic producers.
The biggest challenge for the government and the armed forces will be to keep this commitment to domestic producers in the event of an operational requirement.
From UPSC perspective, the following things are important :
Prelims level: Optical fibre cables and their working, AandN Islands
Mains level: Digital India outreach in AandN Islands
PM has launched the submarine Optical Fibre Cable (OFC) connecting Andaman & Nicobar Islands to the mainland.
Try this PYQ:
Q. Consider the following statements regarding optical fibres:
A layer called the cladding, which has a refractive index more than that of the core, surrounds the core of the optical fibre.
Light is propagated in an optical fibre by refraction and internal reflection.
Which of the above statements is/are correct?(CSP 2010)
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
What is a submarine communications cable?
A submarine communications cable is a cable laid on the seabed between land-based stations to transmit telecommunication signals across stretches of ocean and sea.
The optical fibre elements are typically individually coated with plastic layers and contained in a protective tube suitable for the environment where the cable will be deployed.
Compared to satellites, using internet connection through submarine cables is more reliable, cost-efficient and of large capacity.
About the project
About 2,300 km of submarine optical fibre cable (OFC) has been laid at a cost of about Rs 1,224 crore to provide better connectivity in the UT.
The project envisages better connectivity from Chennai to Port Blair and seven other Islands — Swaraj Deep (Havelock), Long Island, Rangat, Hutbay (Little Andaman), Kamorta, Car Nicobar and Campbell Bay (Great Nicobar).
The project is funded by the government through the Universal Service Obligation Fund under the ministry of communications.
The foundation stone for the project was laid by PM Modi in December 2018 at Port Blair.
Expected outcomes
The OFC will enable the delivery of faster and more reliable mobile and landline telecom services to Andaman & Nicobar Islands, at par with other parts of India.
The submarine optical fibre cable link will deliver bandwidth of 2 x 200 Gigabits per second (Gbps) between Chennai and Port Blair, and 2 x 100 Gbps between Port Blair and the other islands.
4G mobile services, which were constrained due to limited backhaul bandwidth provided via satellite, will also see a major boost.
Benefits of the project
Better connectivity in the region will facilitate the delivery of e-governance services such as telemedicine and tele-education.
E-commerce: Small enterprises will benefit from opportunities in e-commerce, while educational institutions will utilise the enhanced availability of bandwidth for e-learning and knowledge sharing.
Business Process Outsourcing services and other medium and large enterprises too also benefit from better connectivity.
Low cost internet:The internet bills in Andaman and Nicobar will also come down substantially.
From UPSC perspective, the following things are important :
Prelims level: Geothermal springs
Mains level: Not Much
The Himalayas, which hosts about 600 geothermal springs needs to be considered while estimating emissions to the carbon cycle and thereby to global warming says, Indian researchers.
Note the following hot springs in India:
1) Panamik in Nubra valley
2) Kheer Ganga in Kullu, Himachal
3) Manikaran Sahib, Himachal
4) Tattapani, Chhattisgarh
5) Gaurikund, Uttarakhand
6) Yumthang, Sikkim
7) Reshi, Sikkim
Geothermal springs
Geothermal or Hot springs are heated by shallow intrusions of magma (molten rock) in volcanic areas. Some thermal springs, however, are not related to volcanic activity.
The water is heated by convective circulation: groundwater percolates downward & reaches depths of a kilometre or more where the temperature of rocks is high because of the normal temperature gradient of the Earth’s crust.
Why consider the Himalayas?
The Himalayan geothermal springs which cover about 10,000 square km in the Garhwal region of Himalaya show a significant discharge of CO2 rich water.
The estimated carbon dioxide degassing (removal of dissolved gases from liquids, especially water or aqueous solutions) flux is nearly 7.2 ×106 mol/year to the atmosphere.
Such CO2 degassing should be taken into account to assess global carbon outflux in the earth’s atmosphere.
Where does this CO2 come from?
Carbon outflux from Earth’s interior to the exosphere through volcanic eruptions, fault zones, and geothermal systems contribute to the global carbon cycle that effects short and long term climate of the Earth.
The CO2 in the thermal springs are sourced from metamorphic decarbonation of carbonate rocks present deep in the Himalayan core along with magmatism and oxidation of graphite.
Most of the geothermal water is dominated by evaporation followed by weathering of silicate rocks.
Isotopic analyses further point towards a meteoric source for geothermal water.
From UPSC perspective, the following things are important :
Prelims level: Mount Sinabung
Mains level: Not Much
The Mount Sinabung volcano in Indonesia has erupted spouting ash at least 5,000 metres high into the sky.
In the Philippines, a volcano called Taal on the island of Luzon; 50 km from Manila has recently erupted in January. Note all such recent eruption in news.
Also, try this PYQ:
Consider the following statements:
The Barren Island volcano is an active volcano located in the Indian Territory.
Barren Island lies about 140 km east of Great Nicobar
The last time the Barren Island volcano erupted was in 1991 and it has remained inactive since then.
Which of the statements given above is/are correct? (CSP 2018)
(a) 1 only
(b) 2 and 3 only
(c) 3 only
(d) 1 and 3
Mount Sinabung
It is a Pleistocene-to-Holocene stratovolcano in the Karo plateau of Karo Regency, North Sumatra, Indonesia.
It is created by the subduction of the Indo-Australian Plate under the Eurasian Plate.
It erupted in 2010 after a 400-year-long hiatus and has been continuously active since September 2013.
From UPSC perspective, the following things are important :
Prelims level: Articles related to contempt of court
Mains level: Paper 2-Contempt of court
The concept of contempt of court has been in the news recently. This article analyses the issue and draws on the approach adopted by the British judiciary.
Issues with the concept of contempt
The concept of contempt is a centuries-old British law abolished in 2013.
At the time the British Law Commission said that one of the intentions for contempt of court was to hide judicial corruption.
The concept, therefore, clashed with the need for transparency but also freedom of speech.
Let’s look into some comment’s from judges
In1968, a British judge, had this to say of the Law of Contempt “We will not use it to suppress those who speak against us. We do not fear criticism, nor do we resent it. For there is something far more important at stake. It is no less than freedom of speech itself. “
In a 2008 lecture by Justice Markandey Katju noted that “The test to determine whether an act amounts to contempt of court or not is this: Does it make the functioning of judges impossible or extremely difficult? If it does not, then it does not amount to contempt of court even if it’s harsh criticism”.
Way forward
Whilst justice is important, judges must not take themselves too seriously.
Even if their amour propre is offended, it does not mean the institution has been questioned or justice brought into disrepute.
Judges deliver justice, they do not embody it.
They should never forget their Court is supreme because it’s final not because it’s infallible.
When they lapse they can be criticised, but of course, politely and fairly.
Conclusion
Indian Supreme Court hopefully pay attention to this aspect while delivering the judgement on the contempt cases.
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Demand problem and ways to deal with it
The focus of this article is on the behavioural changes in the consumer post Covid. It also suggest the ways to deal with these changes.
Context
The consumer during and post-COVID is showing remarkable flexibility, bringing about a paradigm shift in her consumption pattern.
Issue of generating demand
Some state governments are busy demanding the opening up of the economy.
However, the issue is that the economy does not merely need opening up, but it requires urgent generation of basic demand.
That is why consumer behaviour needs to be closely watched.
Since the lockdown, the priorities of consumers have seen a drastic shift.
Factors to consider to increase demand
1) The decrease in the purchasing power to buy products needs to be addressed.
The government must look at ways like a reduction in taxes which will help the common man.
2) The current scenario has also made all of us go back to the basic needs.
Luxury products hold little value. But renting will increase.
3) The emphasis will be on saving for a rainy day, whether in the case of banks or households
4) Aviation, tourism and hospitality sectors have been hit and continue to remain so even after the restrictions are lifted.
5) e-commerce has shown exponential growth and will continue to do so.
6) With “Vocal for Local” gaining momentum, there’s a huge increase in local apps, local kirana stores, local artisans and brands.
7) Schools and colleges have taken a hit as e-learning and online courses are being preferred.
8) The entertainment industry has been drastically hit. The media and entertainment industry needs to pay heed to this and curate content accordingly.
9) With a lot of people laying emphasis on their health and immunity, there’s been a substantial rise in the consumption of organic, ayurvedic, and immunity-boosting products.
Apart from the obvious products, financial and medical insurance will play an important role.
10) Real estate will suffer as no long-term, high investment purchases will be favoured, but renting will increase.
Role of the government
1) People need to be provided with their daily needs — basic essentials such as food, water, housing, and electricity.
The government is already taking care of that, but money also needs to be given.
2) Jobs need to be provided through development of infrastructure projects.
3) Farmers need to have insurance for their crops and the infrastructure to sell at the right price.
4) Migrant workers with their livelihoods being disrupted are looking for support,and many are focusing on agriculture as a means of income.
Way forward
The government should focus on generating demand for products, and create jobs by improving infrastructure.
The government must incentivise spending by offering tax benefits on the amount spent.
Government must forget about fiscal prudence this year.
Consumers in rural areas are buying more than before.Companies should focus on tapping the rural demand
Consider the question “Demand has been the driver of India’s growth. But the pandemic has dampened it with devastating effect. Agaist this backdrop suggest the measures to be taken by the government to revive the demand.”
Conclusion
With focus on these emerging trends and changing behaviour of the consumers, the government must take steps to bring the economy fast on the tracks.
From UPSC perspective, the following things are important :
Prelims level: Immunity certificates/ passports
Mains level: Ethical/Health concerns involved in issuing immunity passports
There is a growing debate for a rethink on “immunity passport” to be handed out to those who have recovered from COVID-19 for the purpose of travel or work without restrictions of quarantine.
Try this question form mains:
Q.Discuss various ethical issues evolved during the outbreaks of pandemics (of the scale of COVID-19).
Immunity Passports
They are the recovery or release certificate or a document attesting that its bearer is immune to a contagious disease.
The concept has drawn much attention during the COVID-19 pandemic as a potential way to contain the pandemic and permit faster economic recovery.
The can be used as a legal document granted by a testing authority following a serology test demonstrating that the bearer has antibodies making them immune to a disease.
What is the ongoing debate?
Experts argue that if reinfections were a significant problem, by now, there would have been hundreds or at least thousands of cases of reinfections at the global level.
Till such time effective vaccines become available people who have recovered from COVID-19 should be permitted to travel without restrictions.
A case for consideration
Immune protection after infection/disease is always much more robust than most vaccines, and definitely than most COVID-19 vaccines in development.
Some of the vaccines undergoing clinical trials are mostly directed at a single or a couple of proteins (spike) of the virus.
But vaccines under trial that use the inactivated coronaviruses would expose the immune system to a whole range of viral proteins, much like natural infection and can produce immune responses.
However, it is not known if people who have experienced asymptomatic infection would show robust immune responses like those who have recovered from moderate or severe disease.
Ethical issues involved
Issuing ‘immunity certificates’ to people who have recovered can be an ethical minefield.
Doctors do not generally prefer immunity to be induced by natural infection compared with vaccines. It seems logical, but there are multiple challenges.
There might be long-term health complications in those who had COVID-19, whereas the vaccine will have minimal or no adverse health consequences.
There is a danger that similar arguments will be made for other vaccine-preventable diseases for which we have a universal immunisation programme.
There is also a public health risk of issuing immunity certificates:
People whose livelihood has have been affected would be encouraged to adopt risky behaviour so as to get infected rather than taking precautions to stay protected from the virus.
This would lead to a sharp increase in cases across the country with huge numbers requiring hospitalization.
Such a situation would lead to testing capabilities getting overwhelmed, crumbling of the health-care systems and increased deaths.
Threats over malpractices:
Immunity certification will include a system for identification and monitoring, thus compromising privacy.
Other contentious issues would be profiteering by private labs performing tests, and the menace of fake certificates which we have already seen in some Indian states.
In the end, an immunity passport will further divide the society with different ‘haves’ and ‘have-nots’.
Way forward
We need to look at COVID-19 with a sense of balance and not hysteria.
Terms such as immunity passports may not have relevance as we do not know anything about specific kinds of immune responses and the duration of protection in people.
There is currently not enough evidence about the effectiveness of antibody-mediated immunity to guarantee the accuracy of an ‘immunity passport’ or ‘risk-free certificate’.
The permission to travel or work should be decided on a case by case basis, according to the principles of ethics while dealing with a pandemic.
From UPSC perspective, the following things are important :
Prelims level: Quit India Movement
Mains level: India's freedom struggle
On August 8, 78 years ago, Mahatma Gandhi gave the call for British colonizers to “Quit India” and for the Indians to “do or die” to make this happen.
Try this PYQ:
Q.With reference to the Indian freedom struggle, consider the following events:
Mutiny in Royal Indian Navy
Quit India Movement launched
Second Round Table Conference
What is the correct chronological sequence of the above events?(CSP 2017)
(a) 1-2-3
(b) 2-1-3
(c) 3-2-1
(d) 3-1-2
What led to the events of August 1942?
While factors leading to such a movement had been building up, matters came to a head with the failure of the Cripps Mission.
World War II was raging, and a beleaguered British needed the cooperation of their colonial subjects in India.
To this end, in March 1942, a mission led by Sir Stafford Cripps arrived in India to meet leaders of the Congress and the Muslim League.
The idea was to secure India’s whole-hearted support in the war, in return for self-governance.
However, despite the promise of “the earliest possible realization of self-government in India”, the offer Cripps made was of dominion status, and not freedom.
A final blow
The failures of the Cripps Mission made Mahatma Gandhi realize that freedom would be had only by fighting tooth and nail for it.
Though initially reluctant to launch a movement that could hamper Britain’s efforts to defeat Fascist forces in the World War, Congress eventually decided to launch a mass civil disobedience.
At the Working Committee meeting in Wardha in July 1942, it was decided the time had come for the movement to move into an active phase.
The Gowalia Tank address and Gandhiji’s arrest
On August 8, Gandhiji addressed the people from Mumbai’s Gowalia Tank maidan with the ‘Do or Die’ mantra.
By August 9, Gandhi and all other senior Congress leaders had been jailed.
He was kept at the Aga Khan Palace in Pune, and later in the Yerawada jail.
It was during this time that Kasturba Gandhi died at the Aga Khan Palace.
The slogan ‘Quit India’
While Gandhi gave the clarion call of Quit India, the slogan was coined by Yusuf Meherally, a socialist and trade unionist who also served as Mayor of Mumbai.
A few years ago, in 1928, it was Meherally who had coined the slogan “Simon Go Back”.
Outcome: A people’s movement
The arrest of the leaders, however, failed to deter the masses. With no one to give directions, people took the movement into their own hands.
In Bombay, Poona and Ahmedabad, lakhs of people clashed with the police on August 9. On August 10, protests erupted in Delhi, UP and Bihar.
There were strikes, demonstrations and people’s marches in defiance of prohibitory orders in Kanpur, Patna, Varanasi, and Allahabad.
The protests spread rapidly into smaller towns and villages.
Till mid-September, police stations, courts, post offices and other symbols of government authority were attacked.
Railway tracks were blocked, students went on strike in schools and colleges across India, and distributed illegal nationalist literature.
Mill and factory workers in Bombay, Ahmedabad, Poona, Ahmednagar, and Jamshedpur stayed away for weeks.
In some places, the protests were violent, with bridges blown up, telegraph wires cut, and railway lines taken apart.
Outcome
The Quit India movement was violently suppressed by the British – people were shot, lathi-charged, villages burnt and enormous fines imposed.
In the five months up to December 1942, an estimated 60,000 people had been thrown in jail.
Significance
Soon after, Gandhi and almost the entire top Congress leadership was arrested and thus began a truly people-led movement in our freedom struggle.
Eventually dispersed violently by the British, it left behind a clear message that the British would have to leave India, and no other solution would be acceptable to its masses.
From UPSC perspective, the following things are important :
Prelims level: Confucius Institutes
Mains level: India-China diplomatic spat since border skirmishes
The Ministry of Education (previously HRD) had sent a letter to several institutions seeking information about the activities of their Confucius Institutes (CIs) and Chinese language training centres.
This has brought the spotlight to China’s CI programme, a key pillar of Beijing’s global soft power effort, and raised questions about the future of India-China cooperation in the education space.
Try this question for mains:
Q.“It cannot be business as usual with China after the border clash.” Critically comment.
What are the Confucius Institutes (CI)?
Starting with a CI in Seoul in 2004, China’s National Office for Teaching Chinese as a Foreign Language (NOCFL) known as Hanban establishes CI.
China has established 550 CIs and 1,172 Confucius Classrooms (CCs) housed in foreign institutions, in 162 countries.
As the Hanban explains on its website, following the experience of the British Council, Alliance Française and Germany’s Goethe-Institut, China began “establishing non-profit public institutions which aim to promote Chinese language and culture in foreign countries”.
What is the presence of CIs in India?
India is reviewing the presence of CIs in seven universities, in addition to 54 MoUs on inter-school cooperation involving China, which is not connected to the CI programme.
How have CIs been viewed around the world?
The CI arrangement has generated debate in the West, where some universities have closed the institutes amid concern over the influence of the Chinese government and it’s funding on host institutions.
Closures of some CIs have been reported in the United States, Denmark, the Netherlands, Belgium, France and Sweden.
While the closures in the West have made news, these cases still represent a minority. Faced with this backlash, China is now rebranding the programme.
Most of the 550 CIs and more than 1,000 CCs around the world are still active, with a presence spanning Africa, Central Asia, Latin America, and across Asia.
What does it mean for India-China relations?
CIs and CCs had already been in India for more than 10 years.
Even prior to the border skirmishes, Indian authorities had viewed the CI arrangement somewhat warily.
Along with the new move to review CIs, Mandarin has been dropped from the list of foreign languages that can be taught in schools in the new National Education Policy.
Not a perfect move
Recent moves by India shows that it cannot be business as usual with China after the border clash.
However, India’s long-term objectives are not clear.
De-emphasizing learning Mandarin is neither likely to impact China’s stance on the border nor help India in developing the expertise and resources it needs in dealing with China.
From UPSC perspective, the following things are important :
Prelims level: BSISO
Mains level: Indian monsoon and its prediction
Researchers at the Indian National Centre for Ocean Information Services (INCOIS), Hyderabad have reportedly found a way to better forecast the Boreal Summer Intra-Seasonal Oscillation (BSISO).
Try this PYQ:
Q.With reference to ‘Indian Ocean Dipole (IOD)’ sometimes mentioned in the news while forecasting Indian monsoon, which of the following statements is/are correct? (CSP 2017)
IOD phenomenon is characterized by a difference in sea surface temperature between tropical Western Indian Ocean and tropical Eastern Pacific Ocean.
An IOD phenomenon can influence an El Nino’s impact on the monsoon.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
What is BSISO?
The BSISO of the Asian summer monsoon (ASM) is one of the most prominent sources of short-term climate variability in the global monsoon system.
It is the movement of convection (heat) from the Indian Ocean to the western Pacific Ocean roughly every 10-50 days during the monsoon (June-September).
Compared with the related Madden-Julian Oscillation (MJO) it is more complex in nature, with prominent northward propagation and variability extending much further from the equator.
It represents the monsoon’s ‘active’ and ‘break’ periods, in which weeks of heavy rainfall give way to brilliant sunshine before starting all over again.
The active phase also enhances monsoon winds and hence the surface waves.
Why predict BSISO behaviour?
Some phases of boreal summer intraseasonal oscillation or BSISO induce high wave activity in the north Indian Ocean and the Arabian Sea, the researchers claimed.
Wave forecast advisories based on the BSISO would be more useful for efficient coastal and marine management.
This finding has a great significance in developing seasonal and climate forecast service for waves and coastal erosion for India.
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: India-Pakistan border disputes
Recently Pakistani PM announced a new political map of Pakistan.
Do you think that the recent launch of new political maps depicting Indian territories by Pakistan would make any difference on the international community’s stance on Kashmir?
A chain reaction
With this, Pakistan became the third country to launch a new political map after India and Nepal did the same.
India had reiterated its territorial claims in J&K, and Ladakh with the new map; this triggered a reaction from Nepal which contested Indian claims in the Kalapani region of Pithoragarh district.
What are the features of the new map?
The new political map of Pakistan has claimed the entire region of Jammu and Kashmir stretching all the way to the edge of Ladakh.
The map also claims Junagarh and Manavadar, a former princely State and territory, respectively that are part of present-day Gujarat.
Pakistan also claimed the entire territory and water bodies that fall in the Sir Creek region in the westernmost part of India.
Defiance of old agreements
The territorial claims of Pakistan are, however, of a far greater extent and challenge many of the past understandings and treaties.
This clearly runs counter to the Simla Agreement which treated Kashmir as a bilateral matter.
It leaves out a claim line at the eastern end of J&K indicating Pakistan’s willingness to make China a third party in the Kashmir issue.
How different is it from previous ones?
A similar map has been part of school textbooks of Pakistan for many years which highlights the territorial aspiration of Pakistan over the northern part of the subcontinent.
The document also maintains bits of reality on the ground as it shows the Line of Control in Kashmir in a red-dotted line.
The map may be used to provide legal cover for some of Islamabad’s territorial ambitions, especially in Kashmir and Sir Creek.
A Cartographical warfare
The map is likely to lead to changes in Pakistan’s position on territorial disputes with India.
By demanding the entire J&K region, Pak is changing the main features of its Kashmir discourse as it includes the Jammu region prominently.
The inclusion of Junagarh and Manavadar opens fundamental issues of territorial sovereignty of India.
Manavadar, a princely territory, joined India on February 15, 1948, and Indian troops marched into Junagarh in September that year incorporating it into Indian Territory.
By normalizing Islamabad’s claims over these former princely territories, Pakistan is most likely to assert its rights over the former princely State of Hyderabad as well.
What does Pakistan plan to gain by this exercise?
Sir Creek is a collection of water bodies that extend from the Arabian Sea deep inside the territory of Kutch and is rich in biodiversity and mangrove forests.
India’s position on Sir Creek is based on the Kutch arbitration case of 1966-69.
The new map can be used to reassert Pakistan’s claims regarding the Rann which it had lost in the arbitration conducted in Geneva.
India’s position regarding Sir Creek is based on the fact that the arbitration had granted the entire Rann and its marshy areas to India while leaving the solid land across the Rann to Pakistan.
By demanding the demarcation to shift towards the eastern bank, Pakistan appears to be going back also on the spirit of the Rann of Kutch arbitration where the overwhelming evidence of maps supported India’s claims.
Are there any claims on its western borders?
The map is silent about territorial claims in the west and northwest of Pakistan.
It indicates Islamabad’s acceptance of the Durand Line as the border with Afghanistan.
The reality on the ground, however, shows problems that continue to haunt Pakistan on that front as well where law and order have been difficult to maintain because of free movement of armed fighters.
A deadly clash between Afghan civilians and Pakistani troops near its Khyber-Pakhtunkhwa province is a usual discourse.
The resultant situation has placed Afghan and Pakistani troops in a confrontational position.
From UPSC perspective, the following things are important :
Prelims level: AIF
Mains level: Economic stimulus for Agri sector
PM has launched a new financing scheme under the ₹1 lakh crore AIF.
Note the following things about AIF:
1) It is a Central Sector Scheme
2) Duration of the scheme
3)Target beneficiaries
Agriculture Infrastructure Fund (AIF)
It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops.
It will support farmers, PACS, FPOs, Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.
These assets will enable farmers to get greater value for their produce as they will be able to store and sell at higher prices, reduce wastage and increase processing and value addition.
What exactly is the AIF?
The AIF is a medium – long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee.
The duration of the scheme shall be from FY2020 to FY2029 (10 years).
Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum.
It will provide credit guarantee coverage under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to Rs. 2 Crore.
Target beneficiaries
The beneficiaries will include farmers:
PACS, Marketing Cooperative Societies, FPOs, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects
From UPSC perspective, the following things are important :
Prelims level: E-Sanjeevani
Mains level: Telemedicine and its effectiveness
1.5 lakh teleconsultations were recently completed on the “eSanjeevani” and “eSanjeevani OPD” tele-medicine.
Why Telemedicine?
Telemedicine can increase the efficiency of care delivery, reduce expenses of caring for patients or transporting to another location, and can even keep patients out of the hospital.
E-Sanjeevani Platform
E-Sanjeevani is a platform-independent, browser-based application facilitating both doctor-to-doctor and patient-to-doctor tele-consultations.
It provides the ease of accessing the health records at the comforts of one’s home.
The application is based on invite-system which restricts it to the actual beneficiaries of the application.
It has a user-friendly interface which facilitates both tech-savvy and novice doctors/users in the rural and urban environment to access the application.
This eSanjeevani platform has enabled two types of telemedicine services viz. Doctor-to-Doctor (eSanjeevani) and Patient-to-Doctor (eSanjeevani OPD) Tele-consultations.
The former is being implemented under the Ayushman Bharat Health and Wellness Centre (AB-HWCs) programme.
Services included:
The telemedicine platform hosts speciality OPDs which include:
Gynaecology, Psychiatry, Dermatology, ENT, Ophthalmology, antiretroviral therapy (ART) for the AIDS/HIV patients, Non-Communicable Disease (NCD) etc
From UPSC perspective, the following things are important :
Prelims level: MPC
Mains level: Paper 3- Impact of covid and the role of government and the central bank
“The article analyses the present scenario of the economy and impact of the steps taken by the central bank and the government.”
Context
Monetary policy committee (MPC) members, through a unanimous vote, decided to keep policy rates unchanged.
MPC also maintained an accommodative stance.
This was the result of inflation hovering around 6% i.e. above the MPCs target of 4%.
Restructuring package after moratorium ends
Moratorium on loans ends 31 August, RBI said the way forward is a restructuring package for businesses and households.
Recent data released by large banks indicate that there has been a sizeable reduction in moratorium in June from 50% in April for all scheduled commercial banks (SCBs).
As economic activity normalizes further, the need for restructuring will be even lower.
What do the trends indicate
Most indicators—manufacturing and services Purchasing Managers’ Index(PMI’s) electricity output, vehicle sales, exports, imports—point to economic momentum settling at 10-15% below covid levels in the near-term.
The RBI’s consumer confidence survey—gauge of consumer spending—was at its lowest in May, and the one-year outlook is not promising.
This implies that consumption demand, especially discretionary demand, will be far lower.
With muted consumption, capacity utilization, which had fallen to 68.2% last December, has fallen further in the last few months.
Thus, investment demand is not likely to see upward momentum in the near term, even with lower interest rates.
How RBI’s intervention made the difference
An economic slowdown of such proportions leads to an increase in risk premium.
Rating upgrade to downgrade ratio of the corporate sector had fallen to 0.05 as in May from a high of 1.11 in December 2018.
Spread between 3-year AAA corporate bonds and sovereign bonds rose to 276 basis points on 26 March.
But the spread has since fallen to 50bps.
This was possible because of the abundant liquidity made available by RBI and credit enhancement provided by the government.
Way forward
RBI and the government will have to work together to revive demand.
Centre has already expanded its gross borrowing to ₹12 trillion.
Even with net tax collections at 53% of last year’s levels, the Centre has increased its spending by 13% over 2019-20.
The government better understand that this is the time to apply Keynesian economics.
Global central banks have become large buyers of sovereign debt to support the larger roles being played the governments.
In India, too, the Centre and states will have to spend to crowd-in private sector spending.
RBI’s role will be important not only as the lender of last resort but also as a buyer of government securities.
It has carried out its function as a central bank well, and brought a semblance of stability to financial markets.
It will have to do the same in the sovereign bond market.
More importantly, it will have to remain vigilant of impending risks to growth and inflation, and be ready to act.
Consider the question “To what extent the steps taken by the RBI and the government to stabilise the economy battered by the covid pandemic were helpful?
Conclusion
As India’s central bank comes towards the end of its interest rate reduction cycle, it will have to navigate the economy through financial and macroeconomic stability. The government will also have to act in tandem with the central bank in steering the economy through this storm.
From UPSC perspective, the following things are important :
Prelims level: Marginal propensity to consume
Mains level: Paper 3- Income level and demand problem
India’s growth has been fuelled by demand which has dampened owing to various factors. One untapped source of demand could be the group which lies at the bottom of income pyramid. This article suggests the ways to increase the income of this group.
Structural demand problem
India’s structural demand problem predates the COVID-19 shock.
This problem has been compounded after lockdown as jobs have been lost and incomes have collapsed.
Boosting domestic demand is critical for an economic revival as external demand is likely to remain muted.
It is argued that India’s growth story has been driven by demand generated by those who are at the top of India’s socio-economic pyramid
But the demand from that section has now plateaued.
So, where the demand is going to come from?
Turn to those at the bottom of the pyramid.
Those at the bottom of pyramid have a high marginal propensity to consume.
But realising the untapped demand potential of this group requires enhancing their incomes and earnings.
Division of India’s workforce
Periodic Labour Force Survey (2018-19) tells us that less than 10 per cent of the workforce is engaged in regular formal jobs.
Another 14 per cent are engaged in regular informal jobs with average monthly earnings (Rs 9,500), which is roughly equivalent to or slightly below a minimum wage.
The self-employed and casual workers account for 50 per cent and 24 per cent of the workforce respectively and report average earnings that are considerably below a decent minimum amount.
Casual workers, who are unlikely to receive work on every day of the month, are at the bottom of the employment structure.
How to increase the earning of those at the bottom of employment structure
Devising strategies that enhance productivity growth in the informal economy could increase their income.
Raising the minimum wages of the worst-off workers.
At present, under the Minimum Wage Act, India has a complex set of minimum wages which offer different wages by occupation type and skill levels.
The Code on Wages (2019) seeks to universalise minimum wages and extend them to the unorganised sector.
Way forward
1) Ensuring a decent minimum wage for those who are the bottom of the distribution — the casual labour, would be helpful in this context.
This will help set a higher wage floor for others engaged in low-paid work, including regular informal workers.
2) It is also important that minimum wages are paid in public workfare programmes too, in particular MGNREGA works.
At present, MGNREGA wages are not covered under the Minimum Wages Act.
3) The minimum wage can be linked to the consumption expenditure of the relatively better-off group of workers.
Consider the question “India’s growth story is scripted by demand which has been tapering off. The new source of demand could be those at the bottom of income structure. Suggest the strategies to increase the income of this group which could then translate into demand.”
Conclusion
The Indian employment challenge today cannot be seen independently of the problem of inadequate income. The above intervention will not only enable income enhancement of those in low-paid work but also add fuel to demand and growth, this time from those at the bottom of the distribution.
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Digital India and role of Google
Context
Google has recently announced a decision to invest $10 billion in India.
To put that sum in context, it is over 10 times the money set aside for 100 smart cities and almost 20 times that for Digital India.
Purpose of that investment is stated to be digitising India.
Digital realities of India Google must consider:
1) Contradictions
India recognises the internet as a human right, and yet, has led the world in internet shutdowns.
Its internet speeds can be slow and variable, but its uptake of smartphones is the world’s fastest.
It is second only to China in internet users, app downloads and social media users.
2) Lack of access to internet
Only 21 per cent of women are mobile internet users, while the percentage for men is twice that number.
There are many societal factors that make it difficult for women and girls to enjoy full digital freedoms.
In rural India, where two-thirds of the country lives, just about a quarter of the population has internet access.
Differences in digital access mean differences in the quality of education.
The gaps are both digital and societal.
3) Lack of access to banks
India’s workforce is mostly informal.
Only 22 per cent of recipients of migrant remittances have access to banks within one km, according to a report by the Centre for Digital Financial Inclusion.
A push from Google and its competitors could make payments and financial access more inclusive.
4) Need for special products for India
you mention new products for India’s unique needs, of which there are many.
Consider the needs in the agricultural sector alone.
Impac of predictive data analytics and basic artificial intelligence into Indian agriculture using readily available technologies would be huge.
Precision farming to improve the timing and quantity of seeding, irrigation and fertiliser usage.
Helping farmers get credit at lower costs and helping predict commodity prices can create $33 billion in new value annually in Indian agriculture.
5) Lack of data governance and issues with it
Nandan Nilekani has said, India will be data rich before it is “economically rich”.
With 650 million internet users, there is a lot of data richness already.
But this data richness exists without a forward-looking and inclusive data governance policy.
The experience with Aarogya Setu, provided a perfect case study on the discomfort within India because of the absence of such governance.
6) Prevalence of misinformation
It is essential to get a handle on the “infodemic” problem in India.
The situation was made far worse by the pandemic, where many of the prejudices, fears have converged.
Google-owned YouTube is a critical medium for spreading information, fact and fiction.
To its credit, YouTube removed over 8,20,000 videos in India in the first quarter of 2020.
This is a great start, but the bad guys will only find ways around it and Google must make deeper investments in both human and machine intelligence to stay ahead.
7) Geopolitical context
India is inching closer to the US corner in the tech Cold War between the US and China.
India-China relationship has cooled this year as a fallout from the political tensions between New Delhi and Beijing.
India acted against Chinese ByteDance-owned video streaming app TikTok, along with 59 mobile apps.
Google’s role will be important as a bargaining chip against China and the partnership with Jio.
This important role may help Google get some domestic leverage with Indian regulators.
8) Job creation
Digital technologies can create jobs.
For this to happen India must streamline the regulations to enhancing the country’s digital and physical foundations.
There is also need for developing more progressive data accessibility laws.
To translate into productive work, the government must invest in skill-building and education at all levels.
Consider the question “Digitising India could accelerate its progress toward development but there are certain factors which must be addressed before India could reap benefits of digitising. Examine such factors and suggest the ways to deal with the issues in digitising the country.”
Conclusion
There is a lot Google can take while working on the task of digitising India. But the above-mentioned factors will help Google chart out its journey well.
| Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Electric vehicles regulation in India
Image source: TOI
The Delhi government has notified the new Electric Vehicle Policy under which it aims to make a quarter of all new vehicle registrations battery-operated by 2024 and thereby help reducing air pollution.
Try this PYQ:
Q.In the context of proposals to the use of hydrogen-enriched CNG (H-CNG) as fuel for buses in public transport, consider the following statements:
The main advantage of the use of H-CNG is the elimination of carbon monoxide emissions.
H-CNG as fuel reduces carbon dioxide and hydrocarbon emissions.
Hydrogen up to one-fifth by volume can be blended with CNG as fuel for buses.
H-CNG makes the fuel less expensive than CNG.
Which of the statements given above is/are correct? (CSP 2018)
(a) 1 only
(b) 2 and 3 only
(c) 4 only
(d) 1, 2, 3 and 4
Some key highlights of the policy are:
A purchase incentive of Rs 5,000 per kilowatt/hour of battery capacity (advanced battery), a maximum incentive of Rs 30,000 per vehicle for two-wheelers.
A purchase incentive of Rs 30,000 per vehicle (advanced battery) for e-autos.
A purchase incentive of Rs 30,000 per vehicle for the purchase of one e-rickshaw and e-cart. Additionally, an interest subsidy of 5 per cent on loans on vehicles with advanced battery.
Conversion of 50 per cent of all new stage carriage buses (all public transport vehicles with 15 seats or more) by 2022.
A purchase incentive of Rs 10,000 per kilowatt/hour of battery capacity (advanced battery), and maximum incentive of Rs 150,000 per vehicle to the first 1,000 e-four wheelers.
Complete removal of road tax and registration fee for all battery electric vehicles.
Significance of the policy
According to the VAHAN database of the Ministry of Road Transport and Highways, electric vehicles comprised only 3.2 per cent of the new vehicles registered in Delhi in 2019-20.
The proposed 25 per cent transformation of Delhi’s new-vehicle market could catalyse electric vehicle production and bring more product diversity.
