This world is full of unsuccessful talents, unrewarded geniuses, and educated derelicts. Nothing in this world can take the place of discipline and persistence.
There comes a time in our lives when we realize our calling, in your case, it is cracking the UPSC IAS exam. When to get where we have to go – even if there are no doors or windows, we will walk through a wall. If this is that time for you please continue reading.
In our discussion with over 1000 bright students last month, we realized that it wasn’t a lack of motivation that stood in the way of their success, it was something else…
Motivation will get you started but it is discipline alone that will keep you growing. Remember, even a drop of rain every day will make a hole in the most stubborn stone. Be that goddamn drop of rain!
It is persistence and discipline that is the bridge between your goals and accomplishments.
Two phases of discipline: 4 failures and then success
A common misconception about discipline is that it is about punishment and suffering. No, It is not! It is about accountability – daily, weekly, monthly.. for the entire journey of your IAS preparation.
Progress of CivilsDaily’s Mentorship student is closely monitored through regular interactions
How to set and enforce that accountability to keep your journey disciplined and always on track?
This is where our 3 tier mentoring comes in:
1. 1st step starts with this Samanvayacall: Once you fill in the form, we get on a 30-40 minute call with you to understand your prep level, working/ study constraints, and current strategies and create a step-by-step plan for the next week, next month and so on
2. You are directed and given access to relevant resources and invite-only platform, Habitat where you can ask your daily doubts, discuss your test-prep questions and have real-time, live sessions on news and op-eds, and find your optional groups.
Daily target monitoring.
3. The third and the most personalized tier is the 1 on 1 mentor allotment who stays with you through the course of your UPSC preparation – always-on chat and on scheduled calls to help you assess, evaluate, and chart the next milestone of your IAS 2023-23 journey.
Working Junta? If you are preparing for IAS 2023-24 and working simultaneously, we can help you design a timetable that fits right in your hectic schedule.
First-time prep? If you are in the last year of college or thinking of dropping a year and preparing for IAS 2023-24 full-time, we can help you pick the right books and craft a practical & personal strategy.
The Make-in-India initiative has yielded many positive results.
The import of toys is down by 70% in the last three years.
Exports have jumped by over 61% over the same period.
In this article, we shall discuss what’s behind the ‘Rebranding of the Indian Toy Story’.
Toy Industry in India
Presently, the Indian toy industry is only 0.5% of the global industry size indicating a large potential growth opportunity.
The domestic toy demand forecasted to grow at 10-15% against the global average of 5%.
The report ‘State of play: India’s toy story- Unboxing fun and beyond’ said India could also target a 2% share of global exports by 2025.
There is high growth potential for India in exports of plastic toys and board games in the US, EU, and the Middle East among other markets.
Significance of Toy Industries
According to a report by the National Productivity Council, India’s toy industry employs 3million workers, of which 70 percent are women.
Toy Industries & Women Empowerment
Employment in the toy manufacturing sector offers its female-majority workforce avenues for socio-economic empowerment, financial security, and skill development.
It also offers opportunities for women to act as agents of change by preserving local toy forms, intrinsic to their regions.
Toy manufacturing also creates possibilities for men and women artisans to work together, thereby promoting equal task division and partnerships.
For instance, in Tamil Nadu, the manufacturing processes of ‘Vilachary‘ clay toys are divided between men and women.
Challenges
Unorganized and fragmented: It continues to be significantly fragmented, with 90 percent of the market being unorganized.
Small scale: 75 percent of domestic manufacturing originates in micro-industries, while 22 percent comes from MSMEs. Less than 3 percent of the domestic toy manufacturing processes come from large units.
Less competitive: The retail value of the Indian toy market is INR 16, 000 crores of which close to three-fourths are Chinese imports.
Chinese incursion: Consumers are habituated for long to cheap Chinese toys.
Govt Initiatives
Toycathon: In January 2021, it launched ‘Toycathon’, a hackathon to develop toys and games based on Indian culture and ethos.
Atmanirbhar Bharat: To promote the indigenous toy manufacturing industry, this multi-Ministerial effort sought to create an ‘Aatmanirbhar’ eco-system for local manufacturers by exploring their untapped potential.
Formal recognition in years: Toy manufacturing clusters across the country have come to be formally recognized and supported by the govt.
Cluster-based production: State govt. are in the process of allocating spaces for toy parks. For instance, Koppal District in Karnataka has recently been recognized as the country’s first toy manufacturing cluster.
Tax incentives: Basic Custom Duty (BCD) on Toys-HS Code-9503 has been increased from 20% to 60% in February 2020.
GI tags: The Toys bearing GI tags such as Chennapatna, Varanasi, etc. are also being exported.
Way forward
Toy industry has its own small-scale industry, artisans comprising rural population, dalits, poor people and tribal population.
In order to take the benefits to these segments, we need to be vocal for local toys.
There is a need for new ideas to be incubated, new start-ups promoted, taking new technology to traditional toy makers and creating new market demand.
The 75th anniversary of India’s Independence is a huge opportunity for the innovators and creators of the toy industry.
Many incidents, stories of our freedom fighters and their valour and leadership can be created into gaming concepts.
There is a need to create interesting and interactive games that ‘engage, entertain and educate’.
Conclusion
As India looks to build its ‘toyoconomy — women workers will continue to play a significant role in fulfilling domestic demand, reducing imports and raising India’s share of toy manufacturing in the global marketplace.
Shinzo Abe, the former Prime Minister of Japan, was shot dead.
Japan under Abe
Abe, one of the most consequential leaders of Japan in its post-war history — was the country’s longest serving PM.
During his time in office, Abe was a great friend of India, and a relationship that he invested personally in.
He also had a special rapport with PM Modi, which came out on multiple occasions.
Transformation in India-Japan ties
(1) Personal visits
During his first stint in 2006-07, Abe visited India and addressed Parliament.
He visited India thrice: in January 2014, December 2015, and September 2017.
No other Prime Minister of Japan has made so many visits to India.
He was the first Japanese PM to be Chief Guest at the Republic Day parade in 2014.
(2) Bilateral talks
The foundation for “Global Partnership between Japan and India” was laid in 2001, and annual bilateral summits were agreed in 2005, Abe accelerated the pace of ties since 2012.
In August 2007, when Abe visited India for the first time as PM, he delivered the now-famous “Confluence of the Two Seas” speech — laying the foundation for his concept of Indo-Pacific.
This concept has now become mainstream and one of the main pillars of India-Japan ties.
(3) Nuclear deal
In September 2014, Modi and Abe agreed to upgrade the bilateral relationship to “Special Strategic and Global Partnership”.
The relationship grew and encompassed issues from civilian nuclear energy to maritime security, bullet trains to quality infrastructure, Act East policy to Indo-Pacific strategy.
When Modi went to Japan in 2014, the Indo-Japan nuclear deal was still uncertain, with Tokyo sensitive about a pact with a non-Nuclear-Proliferation-Treaty member country.
Abe convinced the anti-nuclear hawks in Japan to sign the agreement in 2016.
(4) Defence cooperation
While the security agreement was in place since 2008, under Abe the two sides decided to have Foreign and Defence Ministers’ Meeting (2+2).
They started negotiations on the Acquisition and Cross-Servicing Agreement — a kind of military logistics support pact.
In November 2019, the first 2+2 was held in New Delhi.
A pact for transfer of defence equipment and technology was also signed in 2015, an uncommon agreement for post-War Japan.
(5) Indo-Pacific narrative
During Abe’s tenure, India and Japan came closer in the Indo-Pacific architecture.
Abe had spelt out his vision of the Confluence of the Two Seas in his 2007 speech when the Quad was formed.
It collapsed soon, but in October 2017, as Chinese aggression grew in the Pacific, Indian Ocean, and India’s borders in Doklam, it was Abe’s Japan that really mooted the idea of reviving the Quad.
(6) Development cooperation
During Abe’s visit in 2015, India decided to introduce the Shinkansen System (bullet train).
Under Abe’s leadership, India and Japan also formed the Act East Forum and are engaged in projects in the Northeast, closely watched by China.
The two countries also planned joint projects in Maldives and Sri Lanka among others to counter Beijing’s influence.
(7) Stand against China
Since 2013, Indian and Chinese soldiers have had four publicly known border-stand-offs — April 2013, September 2014, June-August 2017, and the ongoing one since May 2020.
Abe’s Japan has stood with India through each of them.
During the Doklam crisis and the current stand-off, Japan has made statements against China for changing the status quo.
Conclusion: A leader India always missed
Abe was a valuable G-7 leader for India, focused on strategic, economic and political deliverables, and not getting distracted by India’s domestic developments — much to New Delhi’s comfort.
Having hosted Modi at his ancestral home in Yamanashi, the first such reception extended to a foreign leader, Abe was feted at a roadshow in Ahmedabad.
Quite befittingly, the Indian government in January 2021 announced the Padma Vibhushan, the country’s second-highest civilian honour, for Abe.
CAATSA is a law that came into effect in the US in 2017, meant to punish countries having deep engagements with Russia, North Korea, and Iran using economic sanctions.
It said countries having a “significant transaction” with Russian intelligence and military agents will be subject to at least five kinds of sanctions.
Ordinary transactions will not invite sanctions, and the decision of who has sanctions imposed on them comes down to the interpretation of “significant transaction”.
This is one of the various waivers or exemptions mentioned, such as the transaction not affecting US strategic interests, not endangering the alliances it is a part of, etc.
Could it apply to India?
India has purchased the S-400 Triumf missile systems, which have advanced capabilities to judge the distance from a target and launch a surface-to-air missile attack.
Five such systems were bought by India in 2018 for US$ 5.5 billion and in November last year, their delivery began.
They were deployed in Punjab.
However, the application of CAATSA is not limited to the S-400, and may include other joint ventures for manufacturing or developing weapons in the future, or any other kinds of major deals with Russia.
Why did the US enact a law like CAATSA?
The US flagged issues of Russia’s alleged interference in the 2016 Presidential elections, and its role in the Syrian war as some of the reasons for punishing engagement with it.
EU countries that had even more significant ties with Russia for oil and gas supply before the Ukraine-Russia conflict in 2022, had also criticised CAATSA.
Countries facing sanctions
The US has placed sanctions on China and Turkey for purchase of the S-400.
The sanctions included denial of export licences, ban on foreign exchange transactions, blocking of all property and interests in property within the US jurisdiction and a visa ban.
Likely impacts after India’s purchase
The Biden administration has no firm indication on where it leans on India’s case.
However, several senators (US parliamentarians) have called upon the Biden administration to consider a special waiver for India.
This is on account of India’s importance as a defence partner, and as a strategic partner on US concerns over China and in the Quad.
Other US leaders thinks that giving a waiver to India would be the wrong signal for others seeking to go ahead with similar deals.
Why is the S-400 deal so important to India?
Security paradigm: S-400 is very important for India’s national security considerations due to the threats from China, Pakistan and now Afghanistan.
Air defence capability: The system will also offset the air defence capability gaps due to the IAF’s dwindling fighter squadron strength.
Russian legacy: Integrating the S-400 will be much easier as India has a large number of legacy Russian air defence systems.
Strategic autonomy: For both political as well as operational reasons, the deal is at a point of no return.
The Khasi Hills Autonomous District Council (KHADC) in Meghalaya has called for a meeting of traditional heads to revisit the Instrument of Accession that made the Khasi domain a part of the Indian Union.
About KHADC
KHADC is an autonomous district council in the state of Meghalaya in India.
It is one of the three autonomous district councils within Meghalaya, and one of twenty-five autonomous regions of India.
Meghalaya is divided into three regions dominated by as many matrilineal communities — the Khasis, Garos and Jaintias.
The Khasi hills straddle 25 Himas or States that formed the Federation of Khasi States.
Why in news?
Some members of the KHADC agreed that the Instrument of Accession and Annexed Agreement signed with the Dominion of India between December 15, 1947 and March 19, 1948, should be studied.
The treaty was signed by Governor General of India, Chakravarti Rajagopalachari, on August 17, 1948.
What is Instrument of Accession?
It was a legal document first introduced by the Government of India Act, 1935.
It was used in 1947 to enable each of the rulers of the princely states under British paramountcy to join one of the new dominions of India or Pakistan created by the Partition.
The instruments of accession executed by the rulers, provided for the accession of states to the Dominion of India (or Pakistan) on three subjects, namely, defence, external affairs and communications.
Back2Basics: Autonomous District Council (ADC)
The Sixth Schedule of the Indian Constitution allows for the formation of autonomous administrative divisions which have been given autonomy within their respective states.
Most of these ADC are located in North East India with the exception of two in Ladakh and one in West Bengal.
Presently, 10 Autonomous Councils in Assam, Meghalaya, Mizoram and Tripura are formed by virtue of the Sixth Schedule with the rest being formed as a result of other legislations.
Powers and competencies
(1) Executive and legislative powers
Under the provisions of the Sixth Schedule, ADCs can make laws, rules and regulations in the following areas:
Land management
Forest management
Water resources
Agriculture and cultivation
Formation of village councils
Public health
Sanitation
Village and town level policing
Appointment of traditional chiefs and headmen
Inheritance of property
Marriage and divorce
Social customs
Money lending and trading
Mining and minerals
(2) Judicial powers
ADCs have powers to form courts.
They can hear cases where both parties are members of Scheduled Tribes (STs) and the maximum sentence is less than 5 years in prison.
(3) Taxation and revenue
Autonomous district councils have powers to levy taxes, fees and tolls on: building and land, animals, vehicles, boats, entry of goods into the area, roads, ferries, bridges, employment and income and general taxes for the maintenance of schools and roads.
Former NITI Aayog CEO Amitabh Kant has been picked as India’s new Sherpa for the G-20.
Who is a Sherpa (in IR context)?
A Sherpa is the personal representative of a head of state or government who prepares an international summit, particularly the annual G7 and G20 summits.
Between the G7 summits, there are multiple Sherpa conferences where possible agreements are laid out.
This reduces the amount of time and resources required at the negotiations of the heads of state at the final summit.
The name Sherpa—without further context—refers to Sherpa for the G7 summit, but the designation can be extended to different regular conferences where the participation of the head of state is required.
The Sherpa is generally quite influential, although they do not have the authority to make a final decision about any given agreement.
Etymology
The name is derived from the Sherpa people, a Nepalese ethnic group, who serve as guides and porters in the Himalayas, a reference to the fact that the sherpa clears the way for a head of state at a major summit.
They are Tibetan Buddhists of the Nyingmapa sect, and have drawn much of their religious tradition from the Rongphu monastery, located at 16,000 feet on the north side of Mount Everest.
About G20
Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.
Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
To tackle the problems or address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.
In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.
Aims and objectives
The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
It seeks to address issues that go beyond the responsibilities of any one organization.
Members of G20
The members of the G20 consist of 19 individual countries plus the European Union (EU).
The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
The European Union is represented by the European Commission and by the European Central Bank.
Its significance
G20 is a major international grouping that brings together 19 of the world’s major economies and the European Union.
Its members account for more than 80% of global GDP, 75% of trade and 60% of population.
India and G20
India has been a member of the G20 since its inception in 1999.
At least eight people have died after a cloudburst occurred at the Amarnath Cave Shrine near Pahalgam in south Kashmir.
What is a Cloudburst?
Cloudbursts are short-duration, intense rainfall events over a small area.
According to the IMD, it is a weather phenomenon with unexpected precipitation exceeding 100mm/h over a geographical region of approximately 20-30 square km.
What causes Cloudburst?
A study published last year studied the meteorological factors behind the cloudburst over the Kedarnath region.
They analysed atmospheric pressure, temperature, rainfall, cloud water content, cloud fraction, cloud particle radius, cloud mixing ratio, total cloud cover, wind speed, wind direction, and relative humidity during the cloudburst, before as well as after the cloudburst.
The results showed that during the cloudburst, the relative humidity and cloud cover was at the maximum level with low temperature and slow winds.
It is expected that because of this situation a high amount of clouds may get condensed at a very rapid rate and result in a cloudburst.
Impact of climate change
Several studies have shown that climate change will increase the frequency and intensity of cloudbursts in many cities across the globe.
As temperatures increase the atmosphere can hold more and more moisture and this moisture comes down as a short very intense rainfall for a short duration.
This results in flash floods in the mountainous areas and urban floods in the cities.
Also, there is evidence suggesting that globally short-duration rainfall extremes are going to become more intense and frequent.
Try this PYQ
Q.During a thunderstorm, the thunder in the skies is produced by the:
meeting of cumulonimbus clouds in the sky
lightning that separates the nimbus clouds
violent upward movement of air and water particles
Select the correct option using the codes given below:
The recent split in Shiv Sena and the subsequent political slugfest in Maharashtra has brought into focus the legal and constitutional framework to deal with issues when a party splinters and rival factions assert themselves as the recognised political party.
Culture of functioning political parties in India
What is a political party? A political party is an organised group of citizens who hold common views on governance and act as a political unit that seeks to obtain control of government with a view to further the agenda and policy they profess.
Political parties maintain a continuous connection between the people and those who represent them either in government or in the opposition.
Political parties in India are extra-constitutional, but they are the breathing air of the political system.
There are reportedly 2,598 registered political parties, eight national parties and 50 state parties.
The regulation of these parties and elections in the country is a crucial segment of India’s constitutional imagination.
Yet, the proliferation of political parties also means that established parties splinter.
A battle ensues for recognition of one faction or group as the recognised political party and securing the party symbol.
Legal and Constitutional framework
There is a legal and constitutional framework to deal with issues when a party splinters and rival factions assert themselves as the recognised political party.
Article 324 of the Constitution provides that the superintendence, direction and control of elections is vested in the Election Commission.
Conduct of Election Rules, 1961, Rule 5 specifies that the Commission shall specify the symbols that may be chosen by candidates at elections in parliamentary or assembly constituencies and the restrictions to which their choice will be subject.
Choice and allotment of symbol: The Election Symbols (Reservation and Allotment) Order 1968 provides for the choice and allotment of symbols in Parliamentary and Assembly constituencies and for recognition of political parties and matters connected.
Power to recognise party from splinter group: Paragraph 15 of this Order specifies that the Commission has the power to recognise as the party, from amongst splinter groups or rival sections.
Important case on recognition of faction
The classic case on recognition of a faction and accrual of the party symbol is Sadiq Ali v the Election Commission of India (1972).
Here, the Supreme Court was confronted with the case of the Indian National Congress which had split into two factions.
The Commission ruled in favour of Congress (J) being the recognised political party and the case reached to the Supreme Court,
The SC relied on the figures presented to the Commission and found that a substantial majority of the members of the Congress in both its legislative wing as well as the organisational wing supported the Congress (J).
The SC concludes that “numbers have importance in a democratic system of government or political set up, and it is neither possible nor permissible to lose sight of them. Indeed, it is the view of the majority which in the final analysis proves decisive in a democratic set-up.”
It was also concludes that paragraph 15, which gives the Commission power to settle such disputes pertaining to symbols between factions of a party, is entirely legal, for this power accrues from Article 324 that creates the Commission and vests in it the power of superintendence over elections.
Conclusion
In India’s 72nd year as a constitutional democracy, the free and fair regulation of political parties by the Election Commission and the courts is a crucial part of our political success as a nation. The Supreme Court’s thoughtful judgment decades ago is a realisation of the importance accorded to judicial oversight of our political parties.
The ‘States’ Startup Ranking 2021’ was recently released.
‘States’ Startup Ranking 2021’: Key Highlights
Gujarat and Karnataka are the top achievers in creating startup ecosystems for aspiring entrepreneurs.
Gujarat was recognized as having the best performance for the third time in a row.
The top performing states included Jammu and Kashmir, Kerala, Maharashtra, Odisha, and Telangana.
The leaders’category includes Punjab, Tamil Nadu, Uttarakhand, Uttar Pradesh, Andaman and Nicobar Islands, Arunachal Pradesh, and Goa.
Chhattisgarh, Delhi, Madhya Pradesh, Rajasthan, Chandigarh, Puducherry, and Nagaland are among the states and UTs that fall under the category of aspiring leaders.
Andhra Pradesh, Bihar, Mizoram, and Ladakh are among the states in the category of developing startup ecosystems, according to the study.
What are Startups?
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable economic model.
While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to new businesses that intend to grow large beyond the solo founder.
At the beginning, startups face high uncertainty and have high rates of failure, but a minority of them does go on to be successful and influential. Some startups become unicorns.
Why do we need start-ups?
Start-ups make an indispensable contribution in the economic growth of a nation.
(1) Employment Generation
Entrepreneurship creates more avenues for new job in the economy. This would help harness the readily available employment in our country. This mission will reduce the burden from service and agricultural sector and enables condition of balance in economy.
(2) Creation of Wealth
Since entrepreneurs are attracting investors by investing their own resources, the people of the nation would get benefit when startups grow. Since the money is sharing with the society, wealth is creating within the nation.
(3) Better standard of living
Startups can implement innovations and technologies to improve the living of people. There are many startups who are working for rural areas to develop the community.
(4) Economic growth
GDP plays a vital role in enhancing the economic growth of a country. By supporting and encouraging more startups, it is possible to generate more revenue domestically and consumer’s capital will also flow around the Indian economy.
(5) Source for FDI
It has been noted that in recent years, the volume of foreign investments made in the Indian startup is quite huge. The foreign investments in the startups act as an easy capital raise and technological investment for the startups which makes them readily accept the investments coming towards them.
(6) Culture of Entrepreneurship
Startups encourage a culture of entrepreneurship and innovation which leads to create new job opportunities and provide support to the economy. Success stories motivate talented youth to start their own ventures and help them to become a job provider instead of a job seeker.
(7) Advancement in technology
Startups are more focused on new technologies and cutting-edge innovation. Free from a multilayered corporate bureaucracy, startups are more agile and able to build an idea into a product and improve it upon consumer demand with faster decision-making communications.
About Startup India Scheme
Startup India is an initiative of the Government of India.
The campaign was first announced by PM Modi during his speech on 15 August 2015 address from the Red Fort.
The action plan for this initiative is focusing on three areas:
Simplification and Handholding.
Funding Support and Incentives.
Industry-Academia Partnership and Incubation.
An additional area relating to this initiative is to discard restrictive States Government policies within this domain, such as License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances.
It was organized by the Department for promotion of industry and internal trade (DPI&IT).
An evaluation of the Scheme
(A) Successes
Investment: $63 Bn has been invested in Indian startups in the last five years.
Growth: Between 2016 and August 2020, Startup India programme has recognised over 34.8K startups.
Rise of Unicorns: Unicorns are privately held, venture-capital-backed startups that have reached a value of $1 billion. From 17 Unicorns in 2018 the number went up to 38 in 2020 and it’s 71 and counting in 2021.
IPRs: Among these, 8.3K startups received intellectual property rights (IPR) fee benefits, while over 2.6 lakh people enrolled in the entrepreneurship-focused learning courses.
Gender inclusion: In terms of gender diversity across workspaces in India, just 9% of the board members of the top 20 unicorn startups in India are women.
(B) Failures
Clearances: The Startup India scheme had received around 1368 applications by mid-December last year out of which DPIIT has only accepted 502 application forms and recognized them as ‘startups’.
Delay: The delay and lack of efficiency is a cause for the startup plan to fail in some cases.
Funding: The concerns of domestic angel and VCs on capital gains tax remain largely unaddressed.
EODB issues: Venture capital firms and angel investors are more cautious while investing in Indian startups. It is because the conditions, the ease of capital flow and doing business are not stable enough.
Some lacunae of the scheme
Definitional issues: The scheme is criticized by professionals because of the definition of Start-up provided in the scheme. The definition states that a mere act of developing products or services that do not have the potential for commercialization or have no or limited incremental value for customers would not be a start-up.
Test of ‘Innovation’: Each startup is scrutinized by an Inter-Ministerial Board (IMB) to see if the startup is ‘innovative’ – i.e. if it is unique or a world first. Most of start-ups would lie outside the purview of this definition.
Red tapism: Further eligibility of start-up, lies under definition or not, shall be approved or certified by an inter-ministerial board which is a retrograde step and against the government policy of ‘Min Government Max Governance’.
Taxation mirage: A tax break of three years has been given in the scheme. Anyone who has business sense knows that only a few of start-ups will be profitable in the first three years and so this handful can avail them of the tax break.
Patenting terms: The other option for startups to get tax benefits is to get a patent. And we all know that it takes several years to register a patent in India, and if royalty profits accrue before then, the tax benefits will be denied.
Heavy concentration in megacities: Entrepreneurship continues to be “highly concentrated” in three megacities, namely, Mumbai, Bengaluru and Delhi NCR. Such concentration can lead to increased economic inequality and hinder the emergence of entrepreneurs from industries other than those belonging to the clusters.
Inherent challenges to Start-ups in India
Financial scarcity: Availability of finance is critical for startups and is always a problem to get sufficient amounts.
Lack of Infrastructure: There is a lack of support mechanisms that play a significant role in the lifecycle of startups which include incubators, science and technology parks, business development centers etc.
Regulatory bottlenecks: Starting and exiting a business requires a number of permissions from government agencies. Although there is a perceptible change, it is still a challenge to register a company and exiting it.
Compliance hurdles: For example earlier Angel tax, which stands removed no, falls under corruption and bureaucratic inefficiencies as it takes the focus of entrepreneurs away from building a product or service to responding to tax notices and filing appeals.
Low success rate: Several startups fail due to poor revenue generation as the business grows. As the operations increase, expenses grow with reduced revenues forcing startups to concentrate on the funding aspect, thus, diluting the focus on the fundamentals of business.
Lack of an Innovative Business Model: To be successful a startup must be innovative. Unfortunately, Indian startups are less innovative than startups elsewhere. Many Indian startups don’t have an original business idea that is disruptive and by which consumers will be provided with better service.
Non-competitive Indian Markets: Too many startups serving too few consumers are saturating the Indian market. Most startups serve the fraction of Indians who live in urban India. The majority of Indians who live in rural areas and small towns remain untouched by most startups.
Recent challenge: Downtime for Edu-techs
Pandemic accelerated edtech’s ascent:
Massive funding
High rates of enrollment and
Positive word of mouth
However, the metric that the tech companies are using to show their growth is the number of paid enrollments that they achieve by their army of salesmen and NOT the results or true learning outcomes.
They never cared to track learning outcomes through some randomized control trial which would take a lot of money and time.
Edtech companies sell their products without putting a thought if a particular student really needs them.
Their one-size-fits-all sales strategy is now backfiring. It helped them boost their revenue, but without results.
Various initiatives by the Govt.
There are numerous government initiatives to assist start-ups,
MUDRA Scheme: Through this scheme, start-ups get loans from the banks to set up, grow and stabilize their businesses.
SETU (Self-Employment and Talent Utilization) Fund: Government has allotted Rs 1,000 Cr in order to create opportunities for self-employment and new jobs mainly in technology-driven domains.
E-Biz Portal: Government launched e-biz portal, India’s first government to business portal that integrates 14 regulatory permissions and licenses at one source to enable faster clearances and improve the ease of doing business in India.
Credit Guarantee Fund: launched by the GoI to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme.
Fund of Funds for Start-ups (FFS): 10,000 Rs corpus fund established in line with the Start-up India action plan under Small Industries Development Bank of India (SIDBI) for extending support to Start-ups.
Tax Sops: Tax exemption on Capital gain tax, Removal of Angel tax, Tax exemption for 3 years and Tax exemption in investment above Fair Market Value.
Way Forward
The best of the Indian startup ecosystem still lies ahead.
There is a need for policies and progressive strategies from governments to encourage startups and provide access and assistance in key areas including tax clarity, incubation, affordability and licensing.
In any case, governments should be well prepared and dedicated to creating a culture of startups to impact the entrepreneurial ecosystem in their cities, countries and citizens.
Innovation and economic growth depend on being able to produce excellent individuals with the right skills and attitudes to be entrepreneurial in their professional lives.
It is critical, therefore, that nations set out to develop entrepreneurial skills, attitudes and behaviour in the school systems at all levels as a part of the lifelong learning process.
To produce effective entrepreneurs who can initiate change, governments need to cut ‘red tape’ and streamline regulations.
Funding, another daunting and difficult challenge, has to be resolved at earliest with liberal funding mechanisms.
Apart from all these concerns, Start-up India has potential to solve India’s problems and create jobs. Nonetheless, the challenges and changes are not to be dreaded but defeated.
Conclusion
The current economic scenario in India is in expansion mode. Indian Startups are now spread across the length and breadth of the entire country.
The Indian government’s policies like Make in India, Digital India, Atmanirbhar etc. shows the enthusiasm of centre to imbibe reforms.
With the government going full hog on Startups, it could arrest the brain drain.
Efforts are being made by diverse stakeholders in the Indian startup ecosystem to elevate domestic policies in concurrence with global trends.
The monumental indirect tax reform, the Goods and Services Tax (GST), has completed five years in existence. The article analyses the impact of GST on inflation.
Background
Before the implementation, it was said that it would be a boon to the economy in terms of higher revenue buoyancy, lower inflation, higher revenue, higher growth etc.
During the 12 months preceding GST implementation, the Consumer Price Index (CPI) inflation was 3.66%, while it increased to 4.24% post-GST in the next 12 months.
A similar pattern was observed in Australia, New Zealand, and Canada.
An Australian Competition and Consumer Commission study showed that GST initially increases inflation.
How GST can affect prices
In theory, implementing GST should not lead to a change in overall inflation.
The revenue-neutral rate (RNR) is calculated so that it would not cause higher inflation.
But revenue neutrality does not mean that prices would not go up or down in the economy.
This is because the weight of goods in the consumption basket and their contributions to indirect tax collections are not the same.
Importantly, the effect of GST on the prices of certain goods and services depends on the structure and design of taxation.
The RBI, in a 2017 report, showed that about half of the groups of items that GST covers are not in the CPI basket.
So, the effect of GST on prices was expected to be small.
Finally, prior to the GST implementation, it was expected that prices would go down because GST harmonises indirect tax rates and eliminates the cascading effect.
Thus, whether GST has any effect depends on how different factors affect each other.
So, how can we ascertain whether GST has had an inflationary impact in India?
Inflationary impact can be assessed by turning to statistical modeling?
Statistical results provide us with an interesting picture of the impact of GST on price levels.
First, we look into the overall price index (CPI).
Here, the actual CPI growth in the study period is 4.61%, whereas the counterfactual estimate of inflation is 3.24%.
This implies that without the GST implementation, the CPI inflation would have been 3.24%.
This indicates that with the implementation of GST, CPI increased by 1.37 percentage points (pp).
Second, CPI core inflation (which strips off volatile components such as food and fuel from the headline inflation) increased by 1.04pp in the post-GST period (actual inflation was 4.57%, counterfactual inflation was 3.53%).
Third, GST is found to have a significant positive impact on inflation of commodity groups such as paan, tobacco and intoxicants, clothing.
What explains rise in inflation post GST?
Rise in tax rate of some goods: The rise in inflation post-GST implementation could be due to the rise in the tax rate of some goods and services, the inclusion of business activities that were not taxed earlier, or the market structure.
The average weighted GST rate was designed to be neutral, so it might not have contributed much to the observed higher inflation.
Coverage of business activities under GST not taxed earlier would result in higher prices since the firms would pass on the cost to the consumers.
Market power: There is another possibility which would cause result inflation after the GST implementation.
As Joseph Stiglitz opined, rising market power is bad for the economy as it raises economic inefficiency and inequality and lowers the economy’s resiliency.
Further, taking advantage of market power, it is possible that most firms would have passed the taxes to end consumers.
With the existence of market power, firms’ price includes a significant mark-up over marginal costs.
Some results point out the possibility of profiteering in select segments after GST.
To pre-empt this possibility, the government set up National Anti-profiteering Authority (NAA).
Way forward
NAA should monitor the prices of critical or essential goods and services to see the price impact of GST.
Similarly, the Competition Commission of India should observe anti-competitive producer behaviour that hurts consumers via excessive price increases.
These measures may ensure that producers do not take advantage of the GST.
Conclusion
Statistical results suggest that GST implementation has resulted in a decrease in inflation of food items and raised inflation of non-food items.
