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5th Dec| Daily Answer Wars| CD Warzone
Topics for Today’s question:
GS-3 Issues related to direct and indirect farm subsidies and minimum support prices.
Question)
HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WARS (DAW)?
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The essence of CD War Zone | Can you attempt the question of the day?| Get Feedback on the same day from Mentors of Civilsdaily| Join CD WAR ZONE (link inside)
Question of the day: What do you mean by the Minimum Support Price (MSP)? Critically analyse the efficacy of MSP in achieving its objectives? (15 Marks- 250 words)
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Healthy tax collection and the challenge of effective utilization
Context
- Notwithstanding the likely slowdown in economic momentum in the second half of the year, the Union government’s tax collections are on track to surpass its budgeted target by a significant amount this year.
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The current status Union government’s tax collection
- Gross tax collections have already touched the target: Data released by the Controller General of Accounts last week shows that gross tax collections have already touched 58 per cent of the full year’s target, growing by 18 per cent in the first seven months (April-October) of the current financial year.
- Healthy growth in corporate tax collection: Under the broad rubric of taxes, direct tax collections have grown by a robust 26 per cent in the first seven months of the financial year, with healthy growth being seen across both corporate and income tax collections.
- Higher than the nominal GDP growth: While the pace of direct collections has eased during July-October when compared to the first quarter, it continues to be higher than nominal GDP growth in the second quarter.
- Healthy indirect tax collection: On the indirect tax side, GST collections continued to witness healthy growth, recording an increase of 11 per cent in November.
Memory shot in short: Types of Direct Taxes
- Income Tax: Depending on an individual’s age and earnings, income tax must be paid. Various tax slabs are determined by the Government of India which determines the amount of Income Tax that must be paid. The taxpayer must file Income Tax Returns (ITR) on a yearly basis. Individuals may receive a refund or might have to pay a tax depending on their ITR. Penalties are levied in case individuals do not file ITR.
- Wealth Tax: The tax must be paid on a yearly basis and depends on the ownership of properties and the market value of the property.
- Estate Tax: It is also called Inheritance Tax and is paid based on the value of the estate or the money that an individual has left after his/her death.
- Corporate Tax: Domestic companies, apart from shareholders, will have to pay corporate tax. Foreign corporations who make an income in India will also have to pay corporate tax.
- Capital Gains Tax: It is a form of direct tax that is paid due to the income that is earned from the sale of assets or investments
What the Healthy tax collection imply?
- Higher devolution to states: Higher tax collections at the level of the central government imply that devolution to states will be higher than the budgeted amount of Rs 8.16 lakh crore. The months of August and November have in fact witnessed double instalments as the Centre has stepped up devolution.
- States can increase fiscal expenditure: Along with the interest free loan scheme extended by the Centre, higher devolution implies that states have considerable fiscal room to increase capital expenditure. However, this has not been the case so far. Capex by states has been rather muted.
- Provides comfort to governments fiscal arithmetic: As per recent statements by revenue secretary Tarun Bajaj, the government is now hopeful of exceeding the budgeted target by nearly Rs 4 lakh crore. With its spending also likely to surpass earlier expectations by a considerable margin, higher tax collections will provide some comfort to the government’s fiscal arithmetic.
Challenges on the expenditure side
- Increased subsidy bills: On the expenditure side, the Union government is facing a massive increase in its subsidy bill.
- Spending is more than actual budget: Actual spending on the food and fertilizer subsidy and also on LPG will be significantly higher than what has been budgeted for. This is likely to make the fiscal situation challenging.
- Effective utilization is necessary: Considering that the central government has maintained the momentum on its capital spending, growing by around 60 per cent in the first seven months of the year, the overall general government fiscal impulse will depend on how effectively states are able to utilise the extra space available to them.
Conclusion
- Calls for increasing spending to support the economy during this uncertain period will only gain traction as the budget approaches. The government must however resist the temptation. It should stick to the glide path of fiscal consolidation.
Mains Question
Q. In a time of possible economic slowdown, India’s tax collection is on a healthy path. Discuss what good tax collection means for economy?
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Criminalization of Politics
Context
- The increasing trend of criminalization of politics is dangerous and has steadily been eating into the vitals of our democratic polity along with growing corruption of a humongous nature.
What is criminalization of politics?
- Criminals becomes legislators: The criminals entering the politics and contesting elections and even getting elected to the Parliament and state legislature. Criminalization of politics is the focus of public debate when discussion on electoral reforms takes place.
- Criminal nexus: It is result of nexus between politicians and criminals.
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What are the reasons for criminalization of politics
- Political control of state machinery: Increasing trend of criminalization of politics is linked to political control of state machinery, corruption, vote-bank politics and above all, loopholes in the legal system.
- Inaction from bureaucrats: We cannot expect probity and integrity from the bureaucracy if it is controlled in large measure, by criminals. Good governance gets seriously undermined when, for instance, criminals, gangsters or mafia dons, become the political bosses of bureaucrats and subvert the system to serve their interests.
- Embracing the corruption: In such a scenario, the bureaucratic system ceases to resist corruption and often embraces it to carry out the diktats of criminal political bosses and also to suit its own ends.
What are the effects of criminalization of politics?
- Hampering free and fair election: limited choice of voters to elect a candidate to parliament or state. It is against the spirit of free and fair election which is the bedrock of a democracy.
- Unhealthy democratic practice: The major problem is that the law-breakers become law-makers, this affects the efficacy of the democratic process in delivering good governance. These unhealthy tendencies in the democratic system reflect a poor image of the nature of India’s state institutions and the quality of its elected representatives.
- Circulation of black money: It also leads to increased circulation of black money during and after elections, which in turn increases corruption in society and affects the working of public servants.
- Culture of violence: It introduces a culture of violence in society and sets a bad precedent for the youth to follow and reduces people’s faith in democracy as a system of governance.
- Weakening the institutions: This is a pervasive malaise in our body politic, which is assuming cancerous proportions. As a result, the three main pillars of our democracy, namely, Parliament, judiciary and executive, get progressively weakened, and the fundamental concept of a democratic system gets subverted.
What should be done?
- Fast judicial process: Fast-tracking the judicial process will weed out the corrupt as well as criminal elements in the political system.
- Political consensus is necessary: It is high time all political parties came together and developed a consensus on keeping criminals some of them with serious charges including kidnapping, rape, murder, grave corruption and crimes against women out of the system.
- Warning by Vohra committee: The Vohra Committee set up by the Centre in 1993 sounded a note of warning saying that “some political leaders become the leaders of these gangs/armed senas and, over the years, get themselves elected to local bodies, state assemblies and the national Parliament.” This was nearly three decades ago.
Efforts by Supreme court and Executive
- Disclosure of criminal records: In 2002, the Court ruled that every candidate contesting election has to declare his criminal and financial records along with educational qualifications. It must be said that mandatory declaration of assets and existing criminal charges in self-sworn affidavits to the EC, prior to elections, has brought in some degree of transparency.
- Formation of special courts: As a follow-up to these directives, in 2017, the Union government started a scheme to establish 12 special courts for a year to fast track the trial of criminal cases against MPs and MLAs. The apex court has since then issued many directions, including asking the Centre to set up a monitoring committee to examine reasons for delay of investigation in these cases.
- Tackling the pendency of cases: The number of pending cases continues to be a matter of grave concern, so much so that the Supreme Court had been informed, as per media reports of February 2022, that the number of pending criminal cases against sitting and former MLAs and MPs had risen to close to 5,000 towards the end of December 2021.
Conclusion
- There cannot be any leniency to criminals and the corrupt in public life, especially when it comes to a range of crimes which are serious and heinous in nature. Fast tracking trials and expediting the judicial process through a time-bound justice delivery system alone can cleanse our public life and rid it of this widespread disease.
Mains Question
Q. What is the criminalization of Politics? Enlist the reasons for criminalization of politics and solution to tackle the same.
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India’s Soil conservation strategy
Context
- As soil is the basis of food systems, it is no surprise that soil health is critical for healthy food production. World Soil Day (WSD) 2022, annually observed on December 5, aligns with this.
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Theme of the World soil day
- WSD 2022, with its guiding theme, ‘Soils: Where food begins’, is a means to raise awareness on the importance of maintaining healthy soils, ecosystems and human well-being by addressing the growing challenges in soil management, encouraging societies to improve soil health, and advocating the sustainable management of soil.
What is soil?
- Soil is the loose material of the earth’s surface in which the terrestrial plants grow. It is usually formed from weathered rock or regolith changed by chemical, physical and biological process.
Back to basics: Composition of soils
- Mineral matter: It includes all minerals inherited from the parent material as well as those formed by recombination from substances in the soil solution.
- Organic matter: It is derived mostly from decaying plant material broken down and decomposed by the actions of animals and microorganisms living in the soil. It is this organic portion that differentiates soil from geological material occurring below the earth’s surface which otherwise may have many of the properties of a soil. (Note: The end product of breakdown of dead organic material is called humus.)
- Air and water: Normally, both air and water fill the voids in soil. Air and water in the soil have a reciprocal relationship since both compete for the same pore spaces. For example, after a rain or if the soil is poorly drained, the pores are filled with water and air is excluded. Conversely, as water moves out of a moist soil, the pore space is filled with air. Thus the relationship between air and water in soils is continually changing.
Why is soil so important?
- Healthy soils are essential for our survival: They support healthy plant growth, habitat for many insects and other organisms, It enhance both our nutrition and water percolation to maintain groundwater levels, act as a filtration system for surface water.
- Second largest carbon sink after ocean: Soils help to regulate the planet’s climate by storing carbon and are the second largest carbon sink after the oceans. They help maintain a landscape that is more resilient to the impacts of droughts and floods.
- Contribute to the economies: They also support buildings and highways and contribute to the economies of our cities. For instance, the rich, deep fertile soils of the Ganga plain especially its delta and the coastal plains of Kerala support a high density of population through agricultural prosperity.
Soil degradation and its consequences
- Main drivers of soil degradation: The main drivers contributing to soil degradation are industrial activities, mining, waste treatment, agriculture, fossil fuel extraction and processing and transport emissions. Further, excessive use of fertilizers and pesticides, and irrigation with contaminated wastewater are also polluting soils.
- Reasons behind the nutrient loss: The reasons behind soil nutrient loss range from soil erosion, runoff, leaching and the burning of crop residues.
- Increasing soil pollution undermines food security: Today, nutrient loss and pollution significantly threaten soils, and thereby undermine nutrition and food security globally.
- Soil degradation affects around 29% of India’s total land area: Soil degradation in some form or another affects around 29% of India’s total land area. This in turn threatens agricultural productivity, in-situ biodiversity conservation, water quality and the socio-economic well-being of land dependent communities. Nearly 3.7 million hectares suffer from nutrient loss in soil (depletion of soil organic matter, or SOM).
- Irreparable consequences: Impacts of soil degradation are far reaching and can have irreparable consequences on human and ecosystem health.
India’s Soil conservation strategy
- Five- pronged strategy: The Government of India is implementing a five-pronged strategy for soil conservation. This includes making soil chemical-free, saving soil biodiversity, enhancing SOM, maintaining soil moisture, mitigating soil degradation and preventing soil erosion.
- Soil Health Card (SHC) scheme: Earlier, farmers lacked information relating to soil type, soil deficiency and soil moisture content. To address these issues, the Government of India launched the Soil Health Card (SHC) scheme in 2015. The SHC is used to assess the current status of soil health, and when used over time, to determine changes in soil health. The SHC displays soil health indicators and associated descriptive terms, which guide farmers to make necessary soil amendments.
- Pradhan Mantri Krishi Sinchayee Yojana: Other pertinent initiatives include the Pradhan Mantri Krishi Sinchayee Yojana, to prevent soil erosion, regeneration of natural vegetation, rainwater harvesting and recharging of the groundwater table.
- Promoting organic farming practices under National Mission for Sustainable Agriculture (NMSA): In addition, NMSA has schemes promoting traditional indigenous practices such as organic farming and natural farming, thereby reducing dependency on chemicals and other agri-inputs, and decreasing the monetary burden on smallholder farmers.
- FAO’s various initiatives to support government efforts in soil conservation: The Food and Agriculture Organization of the United Nations (FAO) undertakes multiple activities to support the Government of India’s efforts in soil conservation towards fostering sustainable agrifood systems.
- FAO’s collaboration on developing data analytics and forecasting tools: The FAO is collaborating with the National Rainfed Area Authority and the Ministry of Agriculture and Farmers’ Welfare (MoA&FW) to develop forecasting tools using data analytics that will aid vulnerable farmers in making informed decisions on crop choices, particularly in rainfed areas.
FAO working with target States
- To increase capacities of farmers to farm livelihood: The FAO, in association with the Ministry of Rural Development, supports the Deen Dayal Antyodaya Yojana-National Rural Livelihoods Mission’s (DAY-NRLM) Community Resource Persons to increase their capacities towards supporting on-farm livelihoods for the adoption of sustainable and resilient practices, organic certification and agri-nutri-gardens.
- Target states: The FAO works in eight target States, namely, Madhya Pradesh, Mizoram, Odisha, Rajasthan, Uttarakhand, Chhattisgarh, Haryana and Punjab, for boosting crop diversification and landscape-level planning. In Andhra Pradesh, the FAO is partnering with the State government and the Indian Council of Agricultural Research (ICAR) to support farmers in sustainable transitions to agro-ecological approaches and organic farming.
Way ahead
- There is a need to strengthen communication channels between academia, policymakers and society for the identification, management and restoration of degraded soils, as well as in the adoption of anticipatory measures.
- These will facilitate the dissemination of timely and evidence-based information to all relevant stakeholders.
- Greater cooperation and partnerships are central to ensure the availability of knowledge, sharing of successful practices, and universal access to clean and sustainable technologies, leaving no one behind.
Conclusion
- A key component of sustainable food production is healthy soil as nearly 95 percent of global food production depends on soil. The current state of soil health is alarming and unprecedented soil degradation is a major challenge for sustainable food production. India is on track to restore 26 million hectares of degraded land by 2030.
Mains Question
Q. Soil is the basis of the food system, its degradation and nutrient depletion in recent years is alarming. Discuss the soil conservation strategy of India.
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India’s Economic Growth story and the future roadmap
Context
- By 2047, India will complete 100 years after Independence. By that time, India strives to achieve the status of a developed economy, which means achieving a minimum per capita income equivalent to $13,000.
Economic growth during the British period
- Poor state of economy: It is not realized often that India’s economic progress in the first half of the 20th century under British rule was dismal. According to one estimate, during the five decades, India’s annual growth rate was just 0.89%.
- Negligible growth in per capita: With the population growing at 0.83%, per capita income grew at 0.06%. It is not surprising that immediately after Independence, growth became the most urgent concern for policymakers.
Economic growth after Independence
- In the early period, India’s strategy of development comprised four elements:
- Raising the savings and investment rate;
- Dominance of state intervention;
- Import substitution, and
- Domestic manufacture of capital goods.
- Modest growth till 1970: India’s average growth till the end of the 1970s remained modest, with the average growth rate being 3.6%. With a population growth of 2.2%, the per capita income growth rate was extremely modest at 1.4%.
- Improvement in social indicators: On certain health and social parameters, such as the literacy rate and life expectancy, there were noticeable improvements.
- The success of green revolution: While India had to rely on the heavy imports of food grains on a concessional basis, initially, there was a breakthrough in agriculture after the Green Revolution.
- Industrial base widened: The industrial base expanded with time. India became capable of producing a wide variety of goods including steel and machinery.
- Unsustainable fiscal policy: Plan after plan, actual growth was less than what was projected. The Indian economy did grow at 5.6% in the 1980s. But it was accompanied by a sharp deterioration in the fiscal and current account deficits, and the economy faced its worst crisis in 1991-92.
Statistics of economic growth after 1991
- Rapid economic growth: Between 1992-93 and 2000-01, GDP at factor cost grew annually by 6.20%. Between 2001-02 and 2012-13, it grew by 7.4% and the growth rate between 2013-14 and 2019-20 was 6.7%.
- Sustained period of high growth rate: The best performance was between 2005-06 and 2010-11 when GDP grew by 8.8%, showing clearly what the potential growth rate of India was. This is the highest growth experienced by India over a sustained period of five to six years. This was despite the fact that this period included the global crisis year of 2008-09.
- Rising investment rate: There was a corresponding increase in the savings rate. The current account deficit in the Balance of Payments (BOP) remained low at an average of 1.9%.
- Setback to growth after 2011-12: However, the growth story suffered a setback after 2011-12. The growth rate fell to 4.5% in 2012-13 according to the 2004-05 series. The growth rate since then has seen ups and downs. The growth rate touched the 3.7% level in 2019-20.
Roadmap for Future Growth
- Keeping the sustained growth rate: The first and foremost task is to raise the growth rate. Calculations show that if India achieves a 7% rate of growth continuously over the next two decades and more, it will make a substantial change to the level of the economy. India may almost touch the status of a developed economy.
- Maintaining the incremental capital output ratio: If India maintains the incremental capital output ratio at 4, which is a reflection of the efficiency with which we use capital, India can comfortably achieve a 7% rate of growth.
- Investment must be increased: Raising the investment rate depends on a number of factors. A proper investment climate must be created and sustained.
- Private investment is crucial: While public investment should also rise, the major component of investment is private investment, both corporate and non-corporate. It is this which depends on a stable financial and fiscal system. The importance of price stability in this context cannot be ignored.
- New technologies must be embraced: India needs to absorb the new technologies that have emerged, and that will emerge. Its development strategy must be multidimensional.
- Strong Export and manufacturing: India need a strong export sector. It is a test of efficiency. At the same time, India needs a strong manufacturing sector. The organized segment of this sector must also increase.
- Strengthened the social safety nets: As output and income increase, India must also strengthen the system of social safety nets. Growth without equity is not sustainable.
Challenges for India’s growth
- Low per capita income: India today is the fifth largest economy. This is an impressive achievement. However, in relation to per capita income, it is a different story. In 2020, India’s rank was 142 out of 197 countries. This only shows the distance we have to travel.
- Declining growth in developing countries: The external environment is not going to be conducive. The Organization for Economic Co-operation and Development reports a secular decline in growth in developed countries.
- Climate change may affect the growth: Environmental considerations may also act as a damper on growth. Some adjustment on the composition of growth may become necessary.
Conclusion
- Considering the India’s population, India has no option but to grow continuously. Government has undertaken major structural reform and policy initiatives like GATI-SHAKTI to give fillip to growth of economy. These are the steps in the right directions and more such liberalizing initiatives need to be encouraged.
Mains Question
Q. Briefly describe the history of economic growth of India after independence. What could be the roadmap for future growth of India till 2047?
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[Sansad TV] Perspective: Russian Oil Price Cap
Context
- The US has proposed to cap price of Russia’s oil exports along with other G7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy.
- The cap is set to take effect from today, the same day when European Union will impose a boycott on most Russian oil.
- If there was ever any doubt what the premise of the cap was, it’s now clear: the US and its allies want Russia’s crude to keep flowing.
What is the Russian Oil Price Cap?
- The $60 per barrel cap is intended to cut Russia’s oil revenues while keeping Russian crude on the market by denying insurance, maritime services, and finance provided by the Western allies for tanker cargoes priced above a fixed dollar-per-barrel cap.
- Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it.
- The US-proposed cap aims to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.
How would oil keep flowing to the global economy?
- Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike.
- Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.
- Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.
Russian response to the cap
- Russia has said it will not observe a cap and will halt deliveries to countries that do.
- It could retaliate by shutting off shipments in hopes of profiting from a sharply higher global oil price on whatever it can sell around the sanctions.
- Buyers in China and India might not go along with the cap, while Russia or China could try to set up their own insurance providers to replace those barred by US, UK and Europe.
How can Russia bypass this cap?
- Using dark fleet: Russia also could sell oil off the books by using “dark fleet” tankers with obscure ownership, as have Venezuela and Iran.
- Blending: Oil could be transferred from one ship to another and mixed with oil of similar quality to disguise its origin.
How does it impact G7?
- For countries that join the coalition, it would mean simply not buying Russian oil unless the price is reduced to where the cap is determined.
- For countries that don’t join the coalition, or buy oil higher than the cap price, they would lose access to all services provided by the coalition countries including for example, insurance, currency payment, facilitation and vessel clearances for their shipments.
- Most insurers are located in the EU or the United Kingdom and could be required to participate in the cap.
Implications of the Oil Price Cap
- Inflationary impacts: Initially, traders and the tanker owners would find it difficult. There might be a drop in exports and some shock in the production of necessary commodities.
- Energy insecurity: Countries all over the world will have to bear the spillovers effects of the cap. The effect will be more pronounced for developing countries.
Efficacy of the Cap
- Non-comprehensiveness: There is no consensus regarding the cap that should be imposed because of internal disputes in the European Union (EU). Moreover, there is no clarity on the price yet.
- Dual pricing: It is going to create a dual-price market with an official price and a discounted price. We already know that Russia is already selling oil at a discounted price to India, China, and Turkey.
- Global price dynamics: The implications of the sanction on Russia will depend on a number of factors including the World oil prices.
- Loopholes of sanctions: Sanctions are difficult to enforce. Earlier sanctions on Russia have not yielded the desired results.
Hurdles to US intentions
- OPEC+ price control: Much remains to be seen on the response of the OPEC plus countries, where Russia is a major player.
- Lack of consensus: The enforcement of the sanctions would be difficult as there is no consensus among the members.
Impacts on India
- The price cap imposed by the G7, EU and which also includes Australia is aimed to force Russia to sell its crude not above $60.
- China and India purchased crude at a massive $33.28 discount to Brent, indicating that the prices were well below the price cap imposed this week.
- The price cap applies to nations intending to use Western ships and Western insurers—which means it won’t apply to India.
How has India responded?
- The US tried to bring India on board with: from asking India to change its uncritical stance on Russia by-
- Cutting down oil imports
- Stopping defence and other purchases from Russia and
- Avoid the rupee-rouble payment mechanism that circumvent their sanctions
- India has rejected any “moral” duty to join the price cap coalition.
Conclusion
- India has made it clear, through its cabinet ministers, that it will work to ensure energy security of its citizens and will prioritise that over anything else.
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In news: China Indian Ocean Region Forum
China’s top development aid agency convened the first “China-Indian Ocean Region Forum” in the southwestern Chinese city of Kunming.
What is the China Indian Ocean Region Forum?
- It is organised by the China International Development Cooperation Agency (CIDCA).
- It is the latest Chinese initiative focusing on the Indian Ocean Region (IOR).
- It underlines Beijing’s growing strategic interests in a region where its economic footprint has been deepening.
What is it about?
- The CIDCA is China’s new development aid agency similar to the United States Agency for International Development (USAID).
- It aims to-
- Strengthen policy coordination,
- Deepen development cooperation,
- Increase resilience to shocks and disasters, and
- Enhance relevant countries’ capacity to obtain economic benefits through use of marine resources such as fisheries, renewable energy, tourism, and shipping in a sustainable way
Which countries have backed the forum?
- The organisers have said the forum was attended by high-level representatives and senior officials from 19 countries.
- But at least two of those countries, Australia and Maldives, subsequently released statements rebutting the claim, emphasising that they did not participate officially.
Why such a move by China?
China’s ambitions in the Indian Ocean have been motivated by three factors-
- Gaining significance of Indo-Pacific: As the new world order unveils around the Indo-Pacific, Beijing aims to challenge other major powers, such as India, and establish its hegemony.
- Domestic energy security: Beijing needs the Indian Ocean to ensure its energy security and continue fuelling its growth, which defines its foreign policy and international leverage.
- Hegemony establishment: Establishing new and alternative institutions with IOR countries helps China display its presence and influence from the China Sea to the Indian Ocean, reflecting its status as a significant power.
How is China perceiving its interests?
- Political corruption: Beijing has cultivated close and personal relationships with political elites and parties of IOR countries, usually through corruption, party funding, and by turning a blind eye to their human rights abuses and democratic infirmities.
- Fractionalization: Friendship with different political parties in Pakistan; bonhomie with the Rajapaksa clan in Sri Lanka, and close relations with Maldives’ Abdulla Yameen are some examples of this widespread phenomenon.
- Elite capture: In addition, China has often used the elite capture tactic to ensure a pro-China policy and bag geo-economically and strategically significant projects. This includes concessions on Pakistan’s Gwadar Port and Sri Lanka’s Colombo Port City project.
Where does India stand?
- India was the lone absentee in the forum ignoring the invitation.
- China has exposed its intention with the Indian Ocean Region (IOR) countries.
- New Delhi has viewed China’s recent moves in the region warily, including the recent visit of a Chinese military tracking vessel, the Yuan Wang 5, to Sri Lanka.
- Moreover, India sees the Indian-Ocean Rim Association (IORA) as an already established platform for the region.
China’s plans for the IOR
- The forum has underlined China’s stepped-up interest in the IOR, where it is already a major trading partner for most countries and where sea routes lie vital to China’s economic interests.
- The CIDCA forum is the latest initiative to reflect Beijing’s view that it has a clear stake in the region, and that more such initiatives are likely.
Has China out-powered India in the IOR with this move?
- The Chinese initiative looks like a kind of delayed response.
- It can be seen only as a comparison and competitor to India’s SAGAR (Security and Growth for All in the Region), as outlined by PM Modi in Mauritius in 2015.
- The Indian idea is implemented through the nation’s ‘Neighbourhood First’ policy and such other initiatives as ‘‘Project Mausam’ and ‘Integrated Coastal Surveillance System’ (now shared with Maldives).
- All of them are confined to the Indian Ocean, where India too belongs legitimately, unlike China.
Conclusion
- In a way, the new initiative reflects China’s unending greed.
- It also reflects China’s desire and ambition to measure up to the US in reach and outreach, and through them, geo-economics, geopolitical, and geostrategic comparability.
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In news: Electoral Bond Scheme
The government has opened yet another week-long window for electoral bond sales starting December 5.
What are Electoral Bonds?
- Electoral bonds are banking instruments that can be purchased by any citizen or company to make donations to political parties, without the donor’s identity being disclosed.
- It is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
- The citizen or corporate can then donate the same to any eligible political party of his/her choice.
- An individual or party will be allowed to purchase these bonds digitally or through cheque.
About the scheme
- A citizen of India or a body incorporated in India will be eligible to purchase the bond
- Such bonds can be purchased for any value in multiples of ₹1,000, ₹10,000, ₹10 lakh, and ₹1 crore from any of the specified branches of the State Bank of India
- The purchaser will be allowed to buy electoral bonds only on due fulfillment of all the extant KYC norms and by making payment from a bank account
- The bonds will have a life of 15 days (15 days time has been prescribed for the bonds to ensure that they do not become a parallel currency).
- Donors who contribute less than ₹20,000 to political parties through purchase of electoral bonds need not provide their identity details, such as Permanent Account Number (PAN).
Objective of the scheme
- Transparency in political funding: To ensure that the funds being collected by the political parties is accounted money or clean money.
Who can redeem such bonds?
- The Electoral Bonds shall be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.
- Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last General Election to the Lok Sabha or the State Legislative Assembly, shall be eligible to receive the Electoral Bonds.
Restrictions that are done away
- Earlier, no foreign company could donate to any political party under the Companies Act
- A firm could donate a maximum of 7.5 per cent of its average three year net profit as political donations according to Section 182 of the Companies Act.
- As per the same section of the Act, companies had to disclose details of their political donations in their annual statement of accounts.
- The government moved an amendment in the Finance Bill to ensure that this proviso would not be applicable to companies in case of electoral bonds.
- Thus, Indian, foreign and even shell companies can now donate to political parties without having to inform anyone of the contribution.
Issues with the Scheme
- Opaque funding: While the identity of the donor is captured, it is not revealed to the party or public. So transparency is not enhanced for the voter.
- No IT break: Also income tax breaks may not be available for donations through electoral bonds. This pushes the donor to choose between remaining anonymous and saving on taxes.
- No anonymity for donors: The privacy of the donor is compromised as the bank will know their identity.
- Differential benefits: These bonds will help any party that is in power because the government can know who donated what money and to whom.
- Unlimited donations: The electoral bonds scheme and amendments in the Finance Act of 2017 allows for “unlimited donations from individuals and foreign companies to political parties without any record of the sources of funding”.
Way ahead
- The worries over the electoral bond scheme, however, go beyond its patent unconstitutionality.
- The concern about the possibility of misuse of funds is very pertinent.
- The EC has been demanding that a law be passed to make political parties liable to get their accounts audited by an auditor from a panel suggested by the CAG or EC. This should get prominence.
- Another feasible option is to establish a National Election Fund to which all donations could be directed.
- This would take care of the imaginary fear of political reprisal of the donors.
