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  • What India should consider about the proposition to isolate China

    The economic grip China exerts on the world protects it from the threat of isolation. This article examines this issue and its implications for India.

    Worsening U.S.-China ties and implications for other countries

    • After years of cooperating with one another, the U.S. and China are currently at the stage of confrontation.
    • Both are seeking allies to join their camps.
    • This places several countries in Asia, in a difficult position as most of them, loathe to take sides.
    • The U.S. may not necessarily be the first choice for many countries of Asia and the Asia-Pacific region.
    • In the case of China, it is clearly more feared than loved.

    China’s aggression

    •  Beijing’s virtual takeover of Hong Kong has only confirmed what had long been known about China’s intentions.
    • In March-April this year, China further stepped up its aggressive actions, renaming almost 80 geographical features in the region as an index of Chinese sovereignty.
    •  Taiwan, Japan, Vietnam, Indonesia and South Korea have all complained about China’s menacing postures in their vicinity.

    How countries are resisting China

    • Hardly any country in Asia is willing to openly confront China, and side with the U.S.
    • East Asian countries explain that China was always known to be over-protective of the South China Sea.
    • And China consider South China Sea a natural shield against possible hostile intervention by outside forces inimical to it.
    • No U.S. assurance and Chinese aggression has been enough to make countries in the region openly side with the U.S. and against China.

    China’s economic grip and lessons for India

    • Despite a series of diktats from Washington to restrict economic and other relations, China remains unfazed.
    • China seems confident that its stranglehold on the global economy ensures that it does not face any real challenge.
    • It would be wise for India to recognise this.
    • It is equally necessary to realise how fickle some of these countries can be when it comes to economic issues.
    •  At a recent meeting in Washington Australia (a member of the Quad) made it clear that China is important for Australia.
    • Likewise, the U.K.’s Secretary of State for Foreign and Commonwealth Affairs, recently stated in its Parliament, that the U.K. wants a positive relationship with China.
    • It is evident that few nations across the world are willing to risk China’s ire because of strong economic ties.

    India’s relations with neighbouring countries: concerns

    • India’s relations with Nepal, meanwhile, have hit a roadblock over the Kalapani area.
    • In Sri Lanka, the return of the Rajapaksas to power after the recent elections does not augur too well for India-Sri Lanka relations.
    • The strain in India-Bangladesh relations is a real cause for concern since it can provide a beachhead against Chinese activities in the region.

    Growing Chinese presence in India’s sphere of influence

    •  In July, the Chinese Foreign Minister organised a virtual meeting of the Foreign Ministers of Nepal, Afghanistan and Pakistan.
    • In this meeting, China proposed economic corridor plan with Nepal, styled as the Trans-Himalayan Multi-Dimensional Connectivity Network.
    • China has also made headway in Iran to an extent, again at India’s expense.

    Conclusion

    Geo-balancing is not happening to China’s disadvantage. This lesson must be well understood when India plan its future strategy.

  • Increasing dependence on indirect taxes and issues with it

    India, with a tax-GDP ratio of 10.9 per cent in 2019 needs an overhaul of its tax system. This article analyses India’s growing dependence on indirect taxes and its implications for the poor.

    Important changes in direct taxes

    • The wealth tax was abolished in 2016.
    • Wealth tax was replaced by a 2 per cent surcharge on super-rich individuals with taxable income of over Rs 10 crore.
    • But the government rolled back the increase in surcharge in 2019.
    • Corporate taxes were slashed from 30 per cent to 22 per cent to attract foreign investors and induce Indian companies to invest.
    •  Cuts in corporate tax that have resulted in a revenue loss of Rs 1.5 lakh crore have contributed to making the state poor.

    Increasing indirect taxes and cess

    • The share of indirect taxes has increased by up to 50 per cent of the gross tax revenue in FY2019 from 43 per cent in FY2011.
    • The combined share of customs and excise duties and value-added tax reached an all-time high of 10.5 per cent of GDP.
    • This high was following a three-year-long steady increase in customs or excise duty on commonly used goods, such as petroleum products, metals and sugar, automobiles and consumer durables.
    • This is also when the service tax was hiked steadily to 18 per cent under GST from 12.4 per cent in 2014.
    • Swachh Bharat cess and Krishi Kalyan cesses were imposed in addition to GST.
    • The permanent nature of these cesses has been widely opposed by the states and criticised by the CAG.
    • CAG has pointed out the lack of transparency and incomplete reporting in accounts on the utilisation of amounts collected under cesses.
    • All of this is troubling because indirect taxes often penalise the poor and the middle class more than the rich.

    Case for the wealth tax

    • High tax rates on the wealthy in Europe have played a key role in ensuring a strong social security net for the poor.
    • This successful example should encourage India to consider the rationale for a wealth tax.
    • Higher taxes on the super-rich could be used for cash transfers and a fiscal stimulus, that, in India, at 1 per cent of GDP each, have been negligible so far.
    • A wealth tax, a COVID-19 cess on the super-rich and a surcharge on the super-rich for their income from listed equity shares are critical for mitigating the current situation.

    Issues with such policy

    • Cuts in corporate taxes, increased indirect tax revenues, decreased capital expenditure and practically no change in revenue expenditure on health and education show that India’s taxation policy is more business-friendly than pro-poor.
    • This is happening at a time when a supply-side oriented approach to the economy is counter-cyclical.
    • Faced with increased expenditure amid pandemic Centre increased the duty on fuel by a record Rs 10 per litre on petrol when global crude prices have been falling.
    • This speaks of the government’s increased dependency on indirect tax-based revenues.

    Examine the implications of India’s growing dependence on indirect tax revenue? Suggest the measures to reduce such dependence.

    Conclusion

    COVID-19 may be a blessing in disguise if it allows India to reform its tax system in order to make it work towards inclusive growth and sustainable development rather than targeting only investment-led economic growth.

    bACK 2 BASICS
    GO THROUGH THE ARTICLE BELOW FOR MORE INFORMATION ON TAXATION:

    Taxation in India: Classification, Types, Direct tax, Indirect tax

  • 11th August 2020| Daily Answer Writing Enhancement

    Important Announcement:  Topics to be covered on 12th August-

    GS-1 Urbanization, their problems, and their remedies.

    GS-4 Case Studies

    Question 1) 

    Can villages be a big part of the new growth story of India? Analyse in the context of ongoing pandemic situation. 10 marks

     

    Question 2)

    Though many neighbouring countries share India’s concern towards China, their approach in dealing with China differs from India’s approach. In light of this examine the challenges India faces in maintaining its relations with its neighbourhood and the extended neighbourhood. 10 marks

     

    Question 3)

    What is precision farming? What are its benefits? Also, examine the challenges in its application in India. 10 marks

    Question 4)  

    Police stations are more a demo of power center than service center. After getting into civil services, suppose you become Police head of a district. Analyze the steps which you will take to improve the image of the police service. 10 marks

     

     

    Reviews will be provided in a week. (In the order of submission- First come first serve basis). In case the answer is submitted late the review period may get extended to two weeks.

    *In case your answer is not reviewed in a week, reply to your answer saying *NOT CHECKED*. If Parth Sir’s tag is available then tag him.

    For the philosophy of AWE and payment, check  here: Click2Join

  • What is Balance of Payments?

    India’s balance of payments this year is going to be “very very strong” on the back of significant improvement in exports and a fall in imports said the Commerce and Industry Ministry.

    Try this PYQ:

    Q.In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? (CSP 2019)

    1. The foreign currency earnings of India’s IT sector
    2. Increasing the government expenditure
    3. Remittances from Indians abroad

    Select the correct answer using the code given below.

    (a) 1 only

    (b) 1 and 3 only

    (c) 2 only

    (d) 1, 2 and 3

    Balance of Payment

    • BOP is the oldest and the most important statistical statement for any country.
    • In a nutshell BOP of a country is “a systematic record of all economic transactions between the residents of one country with the residents of the other country in a financial year”.
    • Economic Transactions include all the foreign receipts and payments made by a country during a given financial year.
    • Foreign receipts include all the earnings and borrowings by a country from the other countries.

    Read the complete thread, here, at:

    India’s Balance of Payments: Current Account, Capital Account, Goods and Services Account

  • Back in news: Indus Water Treaty (IWT)

    India has refused a request by Pakistan to hold a meeting on issues around the Indus Water Treaty (IWT) at the Attari check post near the India-Pakistan border.

    The IWT has been in existence since 1960, and reached a flash point in the aftermath of the Uri attacks in 2016 with PM declaring that “blood and water couldn’t flow together”.

    About Indus Waters Treaty, 1960

    • The IWT is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
    • According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi and the Sutlej was given to India
    • The control over the water flowing in three “western” rivers of India — the Indus, the Chenab and the Jhelum was given to Pakistan
    • The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic, industrial and non-consumptive uses such as navigation, floating of property, fish culture, etc. while laying down precise regulations for India to build projects
    • India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.

    Talks stalled on key projects

    • Among the key points on the table was evolving a procedure to solve differences on technical aspects governing the construction of the Ratle run-of-the-river (RoR) project on the Chenab in the Kishtwar district.
    • India has called for the appointment of a ‘neutral’ party while Pakistan favours a Court of Arbitration to agree upon a final resolution on the design parameters of this hydropower project.
    • According to the IWT, India has the right to build RoR projects on the three ‘western’ rivers — the Chenab, Jhelum and Indus — provided it does so without substantially impeding water flow in Pakistan downstream.
    • Pakistan believes that the project’s current design does pose a serious impediment and has told the World Bank that it wants a Court of Arbitration (CoA) set up to decide on the issue.
    • India says this is only a technical issue and mutually solvable.
  • What is the Negative Imports List for Defence?

    The Defence Ministry announced a list of 101 items that it will stop importing.

    Try this question for mains:

    Q.Being one of the top importers of defence equipment India is well placed to enhance its domestic manufacturing capacity of defence equipment. Yet, India lacks it after repeated attempts to achieve it. Examine the reasons for this and suggest measures to overcome this anomaly.

    Negative Imports List

    • The negative list essentially means that the Armed Forces—Army, Navy and Air Force—will only procure all of these 101 items from domestic manufacturers.
    • The manufacturers could be private sector players or Defence Public Sector Undertakings (DPSUs).

    Why such a decision?

    • Reduce imports: As per the Stockholm International Peace Research Institute, which tracks defence exports and imports globally, India has been the second-largest importer between 2014 and 2019 with US$ 16.75 billion worth of imports.
    • Boost domestic industry: By denying the possibility of importing the items on the negative list, the domestic industry is given the opportunity to step up and manufacture them for the needs of the forces.
    • Boost exports: The government has been hoping that the defence manufacturing sector can play a leading role in boosting the economy, not just for the domestic market, but to become an exporter as well.

    Items included in the negative list

    The items mentioned in the negative imports list include:

    • water jet fast attack craft to survey vessels, pollution control vessels, light transport aircraft, GSAT-6 terminals, radars, unmanned aerial vehicles, to certain rifles, artillery guns, bulletproof jackets, missile destroyers, etc.

    Impact of the move

    • The items in the list are of proven technologies and do not involve any critical or cutting-edge technology for a next-generation weapon system or platform.
    • Little benefits for domestic players in short-run: Against each of these items are mentioned a year when import embargo would kick in, leading to apprehensions that demands will be placed with foreign vendors until then, leaving very little for domestic producers.
    • The biggest challenge for the government and the armed forces will be to keep this commitment to domestic producers in the event of an operational requirement.
  • Submarine Cable Connectivity to Andaman and Nicobar Islands

    PM has launched the submarine Optical Fibre Cable (OFC) connecting Andaman & Nicobar Islands to the mainland.

    Try this PYQ:

    Q. Consider the following statements regarding optical fibres:

    1. A layer called the cladding, which has a refractive index more than that of the core, surrounds the core of the optical fibre.
    2. Light is propagated in an optical fibre by refraction and internal reflection.

    Which of the above statements is/are correct?(CSP 2010)

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    What is a submarine communications cable?

    • A submarine communications cable is a cable laid on the seabed between land-based stations to transmit telecommunication signals across stretches of ocean and sea.
    • The optical fibre elements are typically individually coated with plastic layers and contained in a protective tube suitable for the environment where the cable will be deployed.
    • Compared to satellites, using internet connection through submarine cables is more reliable, cost-efficient and of large capacity.

    About the project

    • About 2,300 km of submarine optical fibre cable (OFC) has been laid at a cost of about Rs 1,224 crore to provide better connectivity in the UT.
    • The project envisages better connectivity from Chennai to Port Blair and seven other Islands — Swaraj Deep (Havelock), Long Island, Rangat, Hutbay (Little Andaman), Kamorta, Car Nicobar and Campbell Bay (Great Nicobar).
    • The project is funded by the government through the Universal Service Obligation Fund under the ministry of communications.
    • The foundation stone for the project was laid by PM Modi in December 2018 at Port Blair.

    Expected outcomes

    • The OFC will enable the delivery of faster and more reliable mobile and landline telecom services to Andaman & Nicobar Islands, at par with other parts of India.
    • The submarine optical fibre cable link will deliver bandwidth of 2 x 200 Gigabits per second (Gbps) between Chennai and Port Blair, and 2 x 100 Gbps between Port Blair and the other islands.
    • 4G mobile services, which were constrained due to limited backhaul bandwidth provided via satellite, will also see a major boost.

    Benefits of the project

    • Better connectivity in the region will facilitate the delivery of e-governance services such as telemedicine and tele-education.
    • E-commerce: Small enterprises will benefit from opportunities in e-commerce, while educational institutions will utilise the enhanced availability of bandwidth for e-learning and knowledge sharing.
    • Business Process Outsourcing services and other medium and large enterprises too also benefit from better connectivity.
    • Low cost internet:The internet bills in Andaman and Nicobar will also come down substantially.
  • [pib] Himalayan Geothermal Springs release huge amount of carbon dioxide in the atmosphere

    The Himalayas, which hosts about 600 geothermal springs needs to be considered while estimating emissions to the carbon cycle and thereby to global warming says, Indian researchers.

    Note the following hot springs in India:

    1) Panamik in Nubra valley

    2) Kheer Ganga in Kullu, Himachal

    3) Manikaran Sahib, Himachal

    4) Tattapani, Chhattisgarh

    5) Gaurikund, Uttarakhand

    6) Yumthang, Sikkim

    7) Reshi, Sikkim

    Geothermal springs

    • Geothermal or Hot springs are heated by shallow intrusions of magma (molten rock) in volcanic areas. Some thermal springs, however, are not related to volcanic activity.
    • The water is heated by convective circulation: groundwater percolates downward & reaches depths of a kilometre or more where the temperature of rocks is high because of the normal temperature gradient of the Earth’s crust.

    Why consider the Himalayas?

    • The Himalayan geothermal springs which cover about 10,000 square km in the Garhwal region of Himalaya show a significant discharge of CO2 rich water.
    • The estimated carbon dioxide degassing (removal of dissolved gases from liquids, especially water or aqueous solutions) flux is nearly 7.2 ×106 mol/year to the atmosphere.
    • Such CO2 degassing should be taken into account to assess global carbon outflux in the earth’s atmosphere.

    Where does this CO2 come from?

    • Carbon outflux from Earth’s interior to the exosphere through volcanic eruptions, fault zones, and geothermal systems contribute to the global carbon cycle that effects short and long term climate of the Earth.
    • The CO2 in the thermal springs are sourced from metamorphic decarbonation of carbonate rocks present deep in the Himalayan core along with magmatism and oxidation of graphite.
    • Most of the geothermal water is dominated by evaporation followed by weathering of silicate rocks.
    • Isotopic analyses further point towards a meteoric source for geothermal water.
  • In news: Mount Sinabung

    The Mount Sinabung volcano in Indonesia has erupted spouting ash at least 5,000 metres high into the sky.

    In the Philippines, a volcano called Taal on the island of Luzon; 50 km from Manila has recently erupted in January. Note all such recent eruption in news.

    Also, try this PYQ:

    Consider the following statements:

    1. The Barren Island volcano is an active volcano located in the Indian Territory.
    2. Barren Island lies about 140 km east of Great Nicobar
    3. The last time the Barren Island volcano erupted was in 1991 and it has remained inactive since then.

    Which of the statements given above is/are correct? (CSP 2018)

    (a) 1 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1 and 3

    Mount Sinabung

    • It is a Pleistocene-to-Holocene stratovolcano in the Karo plateau of Karo Regency, North Sumatra, Indonesia.
    • It is created by the subduction of the Indo-Australian Plate under the Eurasian Plate.
    • It erupted in 2010 after a 400-year-long hiatus and has been continuously active since September 2013.
  • Issue of contempt of court

    The concept of contempt of court has been in the news recently. This article analyses the issue and draws on the approach adopted by the British judiciary.

    Issues with the concept of contempt

    • The concept of contempt is a centuries-old British law abolished in 2013.
    • At the time the British Law Commission said that one of the intentions for contempt of court was to hide judicial corruption.
    • The concept, therefore, clashed with the need for transparency but also freedom of speech.

    Let’s look into some comment’s from judges

    • In1968, a British judge, had this to say of the Law of Contempt “We will not use it to suppress those who speak against us. We do not fear criticism, nor do we resent it. For there is something far more important at stake. It is no less than freedom of speech itself. “
    • In a 2008 lecture by Justice Markandey Katju noted that “The test to determine whether an act amounts to contempt of court or not is this: Does it make the functioning of judges impossible or extremely difficult? If it does not, then it does not amount to contempt of court even if it’s harsh criticism”.

    Way forward

    • Whilst justice is important, judges must not take themselves too seriously.
    • Even if their amour propre is offended, it does not mean the institution has been questioned or justice brought into disrepute.
    • Judges deliver justice, they do not embody it.
    • They should never forget their Court is supreme because it’s final not because it’s infallible.
    • When they lapse they can be criticised, but of course, politely and fairly.

    Conclusion

    Indian Supreme Court hopefully pay attention to this aspect while delivering the judgement on the contempt cases.

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