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  • What are Sacred Grooves?

    sacred

    This newscard is an excerpt from the original article published in the Sunday edition of TH.

    What are Sacred Grooves?

    • Sacred groves of India are forest fragments of varying sizes, which are communally protected, and which usually have a significant religious connotation for the protecting community.
    • It usually consists of a dense cover of vegetation including climbers, herbs, shrubs and trees, with the presence of a village deity and is mostly situated near a perennial water source.
    • Sacred groves are considered to be symbols of the primitive practice of nature worship and support nature conservation to a great extent.
    • The introduction of the protected area category community reserves under the Wild Life (Protection) Amendment Act, 2002 has introduced legislation for providing government protection to community-held lands, which could include sacred groves.

    Historical references

    • Indian sacred groves are often associated with temples, monasteries, shrines, pilgrimage sites, or with burial grounds.
    • Historically, sacred groves find their mentions in Hindu, Jain and Buddhist texts, from sacred tree groves in Hinduism to sacred deer parks in Buddhism for example.
    • Sacred groves may be loosely used to refer to natural habitat protected on religious grounds.
    • Other historical references to sacred groves can be obtained in Vrukshayurveda an ancient treatise, ancient classics such as Kalidasa’s Vikramuurvashiiya.
    • There has been a growing interest in creating green patches such as Nakshatravana

    Regulation of activities in Sacred Grooves

    • Hunting and logging are usually strictly prohibited within these patches.
    • Other forms of forest usage like honey collection and deadwood collection are sometimes allowed on a sustainable basis.
    • NGOs work with local villagers to protect such groves.
    • Traditionally, and in some cases even today, members of the community take turns to protect the grove.

    Threats to such grooves

    • Threats to the groves include urbanization, and over-exploitation of resources.
    • While many of the groves are looked upon as abode of Hindu deities, in the recent past a number of them have been partially cleared for construction of shrines and temples.

    Total grooves in India

    • Around 14,000 sacred groves have been reported from all over India, which act as reservoirs of rare fauna, and more often rare flora, amid rural and even urban settings.
    • Experts believe that the total number of sacred groves could be as high as 100,000.
    • They are called by different names in different states:
    1. Sarna in Bihar
    2. Dev Van in Himachal Pradesh
    3. Devarakadu in Karnataka
    4. Kavu in Kerala
    5. Dev in Madhya Pradesh
    6. Devarahati or Devarai in Maharashtra
    7. Lai Umang in Maharashtra
    8. Law Kyntang or Asong Khosi in Meghalaya
    9. Oran in Rajasthan
    10. Kovil Kadu or Sarpa Kavu in Tamil Nadu

    What lies ahead?

    • The groves have great research value in in situ conservation of rare, endangered and threatened plant species.
    • It is high time that public awareness is created about the importance of these sacred groves, developmental activities are banned and the felling of trees or removal of any other vegetation is completely stopped.
    • This is possible only by way of enacting a special law for the protection and management of sacred groves.
    • As the management practices and other rituals vary from state to state, the concerned state governments may promulgate such an act as suitable for the state.
    • The idea should be to protect certain rare, endangered and threatened plant species in the era of global warming and climate change.

     

     

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  • Industry urges govt. to establish ‘India Rare Earths Mission’

    To counter India’s reliance on China for imports of critical rare earth minerals, industry has urged the government to establish ‘India Rare Earths Mission’.

    What are Rare Earth Metals?

    • The rare earth elements (REE) are a set of seventeen metallic elements. These include the fifteen lanthanides on the periodic table plus scandium and yttrium.
    • Rare earth elements are an essential part of many high-tech devices.
    • They have a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions.
    • Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems.
    • Rare earth minerals, with names like neodymium, praseodymium, and dysprosium, are crucial to the manufacture of magnets used in industries of the future, such as wind turbines and electric cars.

    Minerals

    Applications of REMs in various fields:

    • Electronics: Television screens, computers, cell phones, silicon chips, monitor displays, long-life rechargeable batteries, camera lenses, light-emitting diodes (LEDs), compact fluorescent lamps (CFLs), baggage scanners, marine propulsion systems.
    • Defense Sector: Rare earth elements play an essential role in our national defense. The military uses night-vision goggles, precision-guided weapons, communications equipment, GPS equipment, batteries, and other defense electronics. These give the United States military an enormous advantage. Rare earth metals are key ingredients for making the very hard alloys used in armored vehicles and projectiles that shatter upon impact.
    • Renewable Energy: Solar panels, Hybrid automobiles, wind turbines, next-generation rechargeable batteries, bio-fuel catalysts.
    • Manufacturing: High strength magnets, metal alloys, stress gauges, ceramic pigments, colorants in glassware, chemical oxidizing agent, polishing powders, plastics creation, as additives for strengthening other metals, automotive catalytic converters
    • Medical Science: Portable x-ray machines, x-ray tubes, magnetic resonance imagery (MRI) contrast agents, nuclear medicine imaging, cancer treatment applications, and for genetic screening tests, medical and dental lasers.
    • Technology: Lasers, optical glass, fiber optics, masers, radar detection devices, nuclear fuel rods, mercury-vapor lamps, highly reflective glass, computer memory, nuclear batteries, high-temperature superconductors.

    DO YOU KNOW?

    Metals such as cadmium, lead are often used in manufacturing plastic and over time can enter coastal waters. These are acutely harmful for coastal wildlife and humans.Different kinds of plastic releases different kinds of metals  that may release when exposed to water and UV lights.

    What are the challenges in accessing Critical minerals?

    • Deposits in geopolitically sensitive regions: Reserves are often concentrated in regions that are geopolitically sensitive or fare poorly from an ease of doing business perspective.
    • Controlled production:  A portion of existing production is controlled by geostrategic competitors. For example, China wields considerable influence in cobalt mining in the Democratic Republic of Congo through direct equity investments and its Belt and Road Initiative.
    • Agreements in advance from outside: Future mine production is often tied up in off take agreements, in advance, by buyers from other countries to cater to upcoming demand.

    MineralsA step taken by Indian government for sourcing strategic minerals

    • For sourcing of strategic minerals, the Indian government established Khanij Bidesh  India Limited (KABIL) in 2019 with the mandate to secure mineral supply for the domestic market.

     India Rare Earths Mission

    • Industries in India have urged to set up a Mission, manned by professionals, like the India Semiconductor Mission and make their exploration a critical component of the Deep Ocean Mission plan of the government.
    • It would seek to encourage private sector mining in the sector and diversify sources of supply for these strategic raw materials.
    • The industry group has mooted making rare earth minerals a part of the ‘Make In India’ campaign, citing China’s ‘Made in China 2025’ initiative that focuses on new materials, including permanent magnets that are made using rare earth minerals.

    Why such move?

    • Though India has 6% of the world’s rare earth reserves, it only produces 1% of global output, and meets most of its requirements of such minerals from China.
    • In 2018-19, for instance, 92% of rare earth metal imports by value and 97% by quantity were sourced from China.

    What lies ahead?

    • There is a need to harness the potential of the country’s own rare earth reserves.
    • This would help build domestic capability and broad-base supply sources for such an important and strategic raw material.

     

  • Darjeeling Tea Industry in Crisis

    tea

    Tea Board officials admitted that Indian tea had not been able to establish itself globally, and that one of its key brands, Darjeeling Tea, was under acute stress.

    About Darjeeling Tea

    • Darjeeling Tea, called the ‘Champagne of Teas’, was the first Indian product to get the GI (Geographical Identification) tag in 2004 for its distinctive aroma and flavour.
    • About 87 gardens in Darjeeling which employ about 55,000 workers produce approximately 7 million kg of tea, most of which is exported.

    Why is it under distress?

    • Garden owners are reeling under higher costs of production and other issues.
    • Inferior quality tea from Nepal is being imported, and then sold and re-exported as premium Darjeeling Tea.
    • Nepal shares similar climatic conditions and terrain, produces tea at a lower price because of less input costs, particularly labour, and fewer quality checks.
    • In 2017, the production of Darjeeling Tea hit a low of 3.21 million kg. Since a substantial market of Darjeeling Tea switched to cheaper varieties of tea, including the imported variety from Nepal.
    • Tea planters and industry experts admit that the tea industry in Darjeeling has not recovered from the damage it incurred in 2017.

    Is climate change impacting production?

    • The decline in production is due to multiple factors, which include climate change, declining yields, and high absenteeism among workers.
    • Because of the hilly terrain of Darjeeling, there is no land left for expansion of tea gardens.
    • The tea bushes are older than other parts of the country.
    • Uprooting and planting them is both time and cost-intensive.

     

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  • Places in news: Shiveluch Volcano

    shiveluch

    The Shiveluch volcano on the Kamchatka Peninsula in the Russian Far East has increased its activity and is now in danger of erupting violently.

    About Shiveluch

    • Shiveluch is one of the largest and most active volcanoes in Kamchatka, having erupted at least 60 times in the past 10,000 years.
    • Kamchatka is home to 29 active volcanoes, part of a vast belt of Earth known as the “Ring of Fire” which circles the Pacific Ocean and is prone to eruptions and frequent earthquakes.
    • It has two main parts: Old Shiveluch, which tops 3,283 metres (10,771 ft), and Young Shiveluch – a smaller, 2,800-metre peak protruding from its side.
    • Young Shiveluch lies within an ancient caldera – a large crater-like basin that likely formed when the older part underwent a catastrophic eruption at least 10,000 years ago.
    • It is this part that has become extremely active; the lava dome continues to grow and that stronger “fumarole activity” has been observed.

     

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  • Who was Srimanta Sankardeva?

    sankardeva

    ‘Gurujana’ a musical tribute to 15th–16th century Assamese polymath Srimanta Sankardeva was recently released by the PIB.

    Srimanta Sankardeva (1449–1568)

    • Sankardeva was a 15th–16th century Assamese polymath; a saint-scholar, poet, playwright, dancer, actor, musician, artist social-religious reformer and a figure of importance.
    • He is widely credited with building on past cultural relics and devising-
    1. New forms of music (Borgeet)
    2. Theatrical performance (Ankia Naat, Bhaona),
    3. Dance (Sattriya)
    4. Literary language (Brajavali)

    Literary works

    • He has left extensive literary trans-created scriptures (Bhagavat of Sankardev), poetry and theological works written in Sanskrit, Assamese and Brajavali.

    Political influence

    • The Bhagavatic religious movement he started, Ekasarana Dharma and also called the Neo-Vaishnavite movement, influenced two medieval kingdoms – Koch and the Ahom kingdom.
    • His influence spread even to some kingdoms as the Matak Kingdom founded by Bharat Singha, and consolidated by Sarbananda Singha in the latter 18th century endorsed his teachings.
    • The assembly of devotees he initiated evolved over time into monastic centers called Sattras, which continue to be important socio-religious institutions in Assam and to a lesser extent in North Bengal even today.

     

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  • Constitution Day: A rare, enduring document

    Constitution

    Context

    • On November 26, 1949, the Constituent Assembly of India adopted our Constitution. Hence, every year we celebrate this day as Constitution or Law Day. India’s Constitution has now endured for almost 73 years.

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    Did you know?

    • The original constitution of India was handwritten by Prem Behari Narain Raizada in a flowing italic style with beautiful calligraphy.
    • 2,000 Amendments were made to the 1st draft of the Constitution before it was finalized.

    Constitution

    Circumstances during the making of the constitution

    • Era of constitutional democracies: Constitution-making itself is a relatively unexceptional endeavor. Ginsburg, Elkins and Blount note that in the period from 1789–2005, 806 national constitutions were promulgated.
    • Shadow of partition: It was written under extraordinarily difficult conditions, The partition of India which resulted in the displacement of millions of people on both sides of the border.
    • Mass death and refugee crisis: Partition was accompanied by mass deaths, devastation, violence, and brutality. Amid all this, as refugees flowed into Delhi, our dual-purpose assembly, a parliament by morning and a constituent body in the afternoon drafted our enduring founding instrument. One that would remain relevant not just for the turbulence of that present, but also would be meaningful for future generations to come.
    • A lengthy process: Of the 148 cases, which were randomly chosen from 806, on average, the constitution-making process took 16 months. India’s constitution-making project took about three years from 1946 to 1949.

    Legitimacy of the constitution

    • Constitution narrates the story of people: It’s not only the text, but also the story crafted of the birth of a constitution that is critical in the internalization of a constitutional order by a people.
    • Legitimacy of constitution makers: The drafters deployed the considerable political goodwill enjoyed by key national leaders who were members of the assembly to give legitimacy to the Constitution.
    • Egalitarian foundation for decent nation: The Constitution reflects the will of the people, and how its egalitarian foundation would create a better, more decent nation.

    Constitution

    Influence of freedom movements on the crafting of the Constitution

    • Rise of constitutionalism: The freedom movement and resistance to colonial power was also good training for constitution-crafting. Dietmar Rothmund highlights the unique evolution of Indian constitutionalism, each set of reforms introduced by the British coloniser, while being designed to fulfil certain demands, leads to inspiring new agitations.
    • Tilak’s Swaraj Bill of 1895: As the legal historian Rohit De writes, the Constitution, had its inspiration in sources like Tilak’s Swaraj Bill of 1895 (which included rights to free speech, free press, equality before law) and the Declaration of Rights of 1918 (where the Indian National Congress demanded that civil and political rights to include the right to life and liberty, freedom of press and association and for all this to be included in the Government of India Act 1919).
    • Resolution of Fundamental Rights and Economic Changes:
    • Constitutional development that drew from the Resolution of Fundamental Rights and Economic Changes at the Karachi Session of the Congress in 1931. This resolution argues that “in order to end exploitation of the masses, political freedom must include economic freedom”.
    • Along with fundamental rights, it provided for ending of bonded and child labour, free primary education, expansion of labour welfare, regime protection labour unions, women workers, providing for redistribution of resources through state control over key industries and national resources, recognizing the communal problem and laying out protection of minority rights.

    Constitution

    Consensus based approach

    • It was also the consensus-oriented method that found favor with the Constituent Assembly that has helped our Constitution endure.
    • The framers appreciated the link between consensus in adoption and the legitimacy of the Constitution. For instance, when debating the adoption of Hindi as a national language, Rajendra Prasad, president of the Constituent Assembly, said that the choice of national language would have to be “carried out by the whole country”.
    • Even if a majority of the Assembly made a choice that was not approved by a section of the people, then, implementation of the Constitution would be rendered perilous. Hence, Hindi was made “the official language of the Union”, while English was retained to be used for all “official purposes”.

    Conclusion

    • India’s drafters and the methodologies they adopted to craft their glorious product, hold lessons for contemporary politicians and law makers. Consensus, craft and vision are invaluable while making an instrument to endure.

    Mains Question

    Q. Explain the impact of colonial legacy and freedom movement on drafting of constitution? What were the extra ordinary circumstances during the partition of India?

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  • Enhancing the credibility of the Election Commission (ECI)

    Election Commission

    Context

    • A vital issue of national importance dominating the headlines for the last three days is the PIL in the Supreme Court regarding the autonomy and neutrality of the Election Commission of India (ECI).

    Election Commission

    Constitutional mandate for Election Commission of India (ECI).

    • The Constitution intended the Election Commission to be fiercely independent and vested it with enormous powers of superintendence, direction and control over all elections.
    • The apex court has repeatedly adjudged these powers to be absolute and unquestionable.
    • It has declared Article 324 to be the reservoir of all powers of the ECI and has repeatedly declared free and fair elections to be part of the basic structure of the Constitution.

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    Back to basics: Appointment & Tenure of Commissioners

    • The President has the power to select Chief Election Commissioner and Election Commissioners.
    • They have tenure of six years, or up to the age of 65 years, whichever is earlier.
    • They have the same status and receive pay and perks as available to Judges of the Supreme Court of India.
    • The Chief Election Commissioner can be removed from office only through accusation by Parliament.
    • Election commissioner or a regional commissioner shall not be removed from office except on the recommendation of the Chief Election Commissioner.

    What are the issues regarding the appointment of the Election commissioners?

    • Flawed system of appointment of the Election Commissioners: They are appointed unilaterally by the government of the day.
    •  B. R. Ambedkar’s remark on tenure: Tenure B R Ambedkar’s statement to the Constituent Assembly “the tenure can’t be made a fixed and secure tenure if there is no provision in the Constitution to prevent a fool or a naive or a person who is likely to be under the thumb of the executive”
    • Uncertainty over the elevation: Uncertainty over the elevation of an Election Commissioner to the post of CEC, which makes them vulnerable to government pressure. They consider themselves on probation, always conscious of how their conduct is viewed by the government, which can exploit this fear. Since all three members have equal voting rights and all decisions in the commission are taken by the majority, the government can even control an independent-minded CEC through the majority voting power of the two Election Commissioners.

    Election Commission

    What are the demands for the appointment of EC’s?

    • Appointments through a broad-based consultation: There has been a demand for appointments through a broad-based consultation, including parliamentary scrutiny.
    • The Proposed mechanism: A collegium consisting of the Prime Minister, leader of the Opposition (LOP) and the Chief Justice of India (CJI).This system is already in operation for the appointment of the Central Vigilance Commissioner, Chief Information Commissioner and Director of the Central Bureau of Investigation.
    • The probable benefit of this mechanism: This will obviate the possibility of allegations against the incumbent of being partisan to the government. Opposition parties would not be able to raise a finger against the incumbent since the LOP would be a party to the selection.
    • Collegium system for appointing Election Commissioners: In its 255th Report, the Law Commission of India also recommended a collegium system for appointing Election Commissioners. Political stalwarts and many former CECs including BB Tandon, N Gopalaswami, TS Krishnamurthy supported the idea.
    • Extending protection to Election Commissioners: At present, only the CEC is protected from being removed (except through impeachment). One has to remember that the Constitution enabled protection for the CEC as it was initially a one-man Commission. Logically, this should have been extended to the other two Commissioners, who were added in 1993, as they collectively represent the ECI.

    Memory shot: Constitutional Provisions in short

    • 324: Functions of EC and its composition.
    • 325: One general electoral roll and equality among the citizens.
    • 326: Adult suffrage.
    • 327: Power to Parliament: To make provisions with respect to elections to federal and State Legislatures.
    • 328: Power to State Legislature: To make laws with respect to elections to such legislature.
    • 329: Bars interference by courts in electoral matters. Notwithstanding anything said in the constitution i.e., validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies shall not be called in question in any court.

    Election Commission

    Added Information: Conditions for filing an Election Petition

    • No election to either House of Parliament or either House of the Legislature of a State shall be called in question except by an election petition.
    • Any elector or candidate can file an election petition on grounds of malpractice during the election.
    • In respect of elections to the Parliament and State Legislatures, they can only be filed before the High Court.
    • In respect of elections for the offices of President and Vice President, such petitions can only be filed before the Supreme Court.

    Conclusion

    • The recent questions raised about the ECI’s credibility are certainly worrisome. An ECI in office with the express consent of both the ruling and opposition parties is a great opportunity to convince the country and all the parties contesting the elections of its neutrality and impartiality.

    Mains Question

    Q. Election Commission of India, the most powerful in the world, is said to have the most flawed appointment system. What are the concerns and demands raised from time to time? Discuss

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  • States ask Centre to curb its ‘Cess’ habit

    cess

    Several States, including some governed by the Centre urged to rein in its reliance on raising revenues through cesses and surcharges which reduce their share in the divisible pool of taxes.

    What are Cesses and Surcharges?

    The Union government has the authority to collect money through a variety of levies referred to as a tax, fee, cess, and surcharge.

    (A) Cess

    • Cess is charged on the tax amount and is levied for a specific purpose.
    • In India, cess is applicable to all the taxpayers, and it is calculated over, and above the base tax liability of the taxpayer, cess taxes initially go to the consolidated fund of India (CFI) that has to be used for the purpose for which it was collected.
    • Education Cess, Swachh Bharat Cess

    (B) Surcharge

    • The surcharge is levied on the tax payable and not on the total income.
    • It directly goes to the CFI, and after that it can be used for any purpose, just like the normal tax.
    • Surcharge applies to the taxpayer whose income is more than Rs 50 lakh.
    • In simple terms, surcharge is a tax on tax that is not collected for any particular cause, and the union government may use the proceeds of surcharges for any purpose it sees as important.
    • The objective behind the surcharge is to put a high tax burden on people with high incomes.

    Difference between the two

    • The rate of cess under income tax is fixed at 4%, whereas the rate of surcharges varies from 10%, 15%, 25% & 37% based on the taxpayers’ total income.
    • Cess is calculated on total tax and surcharge amount; surcharge is calculated on total tax amount only.
    • In a nutshell, while both are taxes, cess is collected from every taxpayer to meet a certain purpose, and the surcharge is an additional tax collected from the taxpayers who have higher slab income.

    Key difference over which states dispute

    • Major difference is that each can be shared with the state government, the surcharge can be kept with CFI, and it can be utilised for other taxes.
    • However, cess should be utilised for a particular reason. This restricts the states expenditure.
    • Tamil Nadu noted that the share of cesses and surcharges had grown from 10.4% of gross tax revenue in 2011-12 to 26.7% in 2021-22.
    • This has deprived the States of their legitimate share of revenue collected by the Union Government.

     

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  • Government forms panel to look into MGNREGA’s efficacy

    mgnrega

    The Central government has constituted a panel to review the implementation and assess efficacy as a poverty alleviation tool of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.

    About the review committee

    • The committee is headed by former Rural Development secretary Amarjeet Sinha.
    • It had its first meeting on November 21, 2022, and has been given three months to submit its suggestions.
    • It is tasked to study the various factors behind demand for MGNREGA work, expenditure trends and inter-State variations, and the composition of work.
    • It will suggest what changes in focus and governance structures are required to make MGNREGA more effective.

    What is MGNREGA?

    • The MGNREGA stands for Mahatma Gandhi National Rural Employment Guarantee Act of 2005.
    • This is labour law and social security measure that aims to guarantee the ‘Right to Work’.
    • The act was first proposed in 1991 by V. Narasimha Rao.

    What is so unique about it?

    • MGNREGA is unique in not only ensuring at least 100 days of employment to the willing unskilled workers, but also in ensuring an enforceable commitment on the implementing machinery i.e., the State Governments, and providing a bargaining power to the labourers.
    • The failure of provision for employment within 15 days of the receipt of job application from a prospective household will result in the payment of unemployment allowance to the job seekers.
    • Any Indian citizen above the age of 18 years who resides in rural India can apply for the NREGA scheme. The applicant should have volunteered to do unskilled work.
    • Employment is to be provided within 5 km of an applicant’s residence, and minimum wages are to be paid.
    • Thus, employment under MGNREGA is a legal entitlement.

    Why is MGNREGS under fire these days?

    • Not enough work: Bihar despite its levels of poverty, does not generate enough work to make a concrete difference, and on the other end of spectrum we have Kerala which is economically better but has been utilising it for asset creation.
    • No asset creation: There is a lack of tangible asset creation. The committee will study if the composition of work taken up presently under the scheme should be changed.

    Issues in implementation

    • Insufficient budgetary allocations: Increase in the nominal budget but actual budget (after adjusting inflation) decreased over the years.
    • Approved Labour Budget Constraints: The Centre through the arbitrary “Approved Labour Budget” has reduced the number of days of work and put a cap on funds through the National Electronic Fund Management System
    • Not so attractive wages rate: Currently, MGNREGA wage rates of 17 states are less than the corresponding state minimum wages.
    • Delay in wage payments: Under the MGNREGA, a worker is entitled to get his or her due wages within a fortnight of completion of work, failing which the worker is entitled to the compensation.
    • No-work situations are rising: None of the states was able to provide full 100 days employment as mentioned in the scheme.
    • Data manipulations by authorities: A recent study has found that data manipulation in the MGNREGA is leading to gross violations in its implementation.
    • Non-purposive spending and corruptions: Many works sanctioned under MGNREGA often seem to be non-purposive. Quite often, they are politically motivated hotspots to create rampant corruption.
    • Centralization weakening local governance: A real-time MIS-based implementation and a centralised payment system has further left the representatives of the Panchayati Raj Institutions with literally no role in implementation.

    Conclusion

    • Large scale social security programmes like MGNREA are subjected to undergo several stumbling blocks in the times of ongoing pandemic.
    • Government and NGOs must study the impact of MGNREGA in rural areas so as to ensure that this massive anti-poverty scheme is not getting diluted from its actual path.
    • We must view MGNREGA as an opportunity and explicitly include it in a broad-based strategy to tackle any socie-economic crisis.

     

    Answer this PYQ in the comment box:

    Q. Among the following who are eligible to benefit from the “Mahatma Gandhi national rural employment guarantee act”?

    (a) Adult members of only the scheduled caste and scheduled tribe households.

    (b) Adult members of below poverty line (BPL) households.

    (c) Adult members of households of all backward communities.

    (d) Adult members of any household.

     

    [wpdiscuz-feedback id=”ds7ayg108y” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • Rationalization in long-term Capital Gains Tax structure on the anvil

    The Finance Ministry is looking at rationalizing long-term capital gains tax structure by bringing parity between similar asset classes and revising the base year for computing indexation benefits.

    What is Capital Gains Tax?

    • Capital gains tax is levied on the profits made on investments (Base Year: 2001).
    • It covers real estate, gold, stocks, mutual funds, and various other financial and non-financial assets.
    • Under the Income Tax Act, gains from sale of capital assets — both movable and immovable — are subject to ‘capital gains tax’.

    Types of CGT

    (A) STCG (Short-term capital asset)

    • An asset held for a period of 36 months or less is a short-term capital asset.
    • The criteria is 24 months for immovable properties such as land, building and house property from FY 2017-18.
    • For instance, if you sell house property after holding it for a period of 24 months, any income arising will be treated as a long-term capital gain, provided that property is sold after 31st March 2017.
    • The reduced period of the aforementioned 24 months is not applicable to movable property such as jewellery, debt-oriented mutual funds etc.

    Some assets are considered short-term capital assets when these are held for 12 months or less. This rule is applicable if the date of transfer is after 10th July 2014 (irrespective of what the date of purchase is). These assets are:

    1. Equity or preference shares in a company listed on a recognized stock exchange in India
    2. Securities (like debentures, bonds, govt securities etc.) listed on a recognized stock exchange in India
    3. Units of UTI, whether quoted or not
    4. Units of equity oriented mutual fund, whether quoted or not
    5. Zero coupon bonds, whether quoted or not

    (B)  LTCG (Long-term capital asset )

    • An asset held for more than 36 months is a long-term capital asset.
    • They will be classified as a long-term capital asset if held for more than 36 months as earlier.
    • Capital assets such as land, building and house property shall be considered as long-term capital asset if the owner holds it for a period of 24 months or more (from FY 2017-18).

    Whereas, below-listed assets if held for a period of more than 12 months, shall be considered as long-term capital asset.

    1. Equity or preference shares in a company listed on a recognized stock exchange in India
    2. Securities (like debentures, bonds, govt securities etc.) listed on a recognized stock exchange in India
    3. Units of UTI, whether quoted or not
    4. Units of equity oriented mutual fund, whether quoted or not
    5. Zero coupon bonds, whether quoted or not

    Why is it so complicated?

    Capital gains tax is complicated for a few primary reasons.

    • First, the rate changes from asset to asset. LTCG tax on stocks and equity mutual funds is 10% but on debt mutual funds is 20% with indexation.
    • Second, holding period changes from asset to asset. The holding period for LTCG tax is two years in real estate, one year for stocks, and three years for debt mutual funds and gold.
    • Third, exemptions available against it come with their own complex conditions. For instance, buying a house after selling one can get you an exemption, but the new house must be bought in two years or built in three years of the sale.

    Stipulated reforms by Finance Ministry

    • Currently, shares held for more than one year attract a 10% tax on long-term capital gains.
    • Gains arising from sale of immovable property and unlisted shares held for more than 2 years and debt instruments and jewellery held for over 3 years attract 20% long-term capital gains tax.
    • Also, a change in base year for computing inflation-adjusted capital gains is being contemplated.
    • The index year for capital gains tax calculation is revised periodically to make it more relevant. The last revision took place in 2017 when the base year was updated to 2001.
    • Since the prices of assets increase over time, the indexation is used to arrive at the inflation-adjusted purchasing price of assets to compute long-term capital gains for the purpose of taxation.

     

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