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  • Back in news: LIC Disinvestment

    The Union government has filed a draft document with the stock market regulator for selling 5% of its shares in the Life Insurance Corporation (LIC) of India.

    Details of the IPO

    • The IPO is a 100% OFS [offer for sale] by the Government of India and entails no fresh issue of shares by LIC.
    • 6 Crore shares are on offer representing 5% of the government’s equity in the firm.
    • As much as 10% of the offer could be reserved for LIC policyholders, as per the regulatory filing, and another 5% of the shares may be reserved for employees.

    About Life Insurance Corporation of India (LIC)

    • LIC is an Indian state-owned insurance group and investment corporation owned by the Government of India.
    • It was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the insurance industry in India.
    • Over 245 insurance companies and provident societies were merged to create the state-owned LIC.

    Why LIC?

    • LIC is India’s largest financial institution.
    • When listed on stock exchanges, it could easily emerge as the country’s top listed company in terms of market valuation, overtaking current leaders Reliance and TCS.
    • It is also the largest investor in government securities and stock markets every year.
    • On average, LIC invests Rs 55,000 crore to Rs 65,000 crore in stock markets every year and emerges as the largest investor in Indian stocks.
    • LIC also has huge investments in debentures and bonds besides providing funding for many infrastructure projects.

    Impacts of listing of LICs

    • Profit-making for govt: The government is trying to make the most of the brand value of LIC, given that it is one of the few remaining profit-making entities owned by the state.
    • Better returns: Listing will boost LIC’s efficiency and thereby policy returns.
    • Reforming the insurance sector: LIC will also become more competitive. This will put pressure on its peers to innovate, benefitting policyholders in terms of pricing, product features, and services.
    • Better financial position: Less govt interference will be a positive for LIC’s financial health.
    • Risk-free: As long as a sovereign guarantee over the maturity proceeds and the sum assured to continue, policyholders won’t perceive any risk.

    Various challenges

    • Structural challenges: LIC can even evolve into a bank like many of its global peers like Axa, Berkshire, and Munich Re.
    • Market hurdles: LIC’s own issues are not the only challenge the company would face in going public. It also remains to be seen if the Indian share market is ready to absorb such a large public issue.
    • Impact on growth: The size of the IPO will determine the extent of liquidity it will suck out, but Indian markets do not have the depth to take the issue of a very size.
    • Fears of disclosure: The Company’s books and operations have been opaque for far too long but it is trusted by 250 million policyholders.
    • Investors trust at risk: Being one of the biggest financial institutions of the country, the move to privatize LIC will shake the confidence of the common man and will be an affront to our financial sovereignty.

    Way Forward

    • Over the years, LIC has become the lender of last resort to the Government of India.
    • Confronted with an unprecedented fiscal deficit and worried by an economy in crisis, the government has to find resources.
    • This disinvestment is also a preferred option for ideological and practical reasons.
    • The government could utilize the money gained by selling off its stakes to improve services in public goods like infrastructure, health, and education.

     

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  • Back in debate: Uniform Civil Code

    Poll-bound Uttarakhand CM’s announcement to prepare a draft of the Uniform Civil Code (UCC) in the State, raises questions over whether an individual State can bring its own family law code.

    What is a Uniform Civil Code?

    • A Uniform Civil Code is one that would provide for one law for the entire country, applicable to all religious communities in their personal matters such as marriage, divorce, inheritance, adoption, etc.
    • Article 44, one of the directive principles of the Constitution lays down that the state shall endeavor to secure a Uniform Civil Code for the citizens throughout the territory of India.
    • These, as defined in Article 37, are not justiciable (not enforceable by any court) but the principles laid down therein are fundamental in governance.

    Why need UCC?

    • UCC would provide equal status to all citizens
    • It would promote gender parity in Indian society.
    • UCC would accommodate the aspirations of the young population who imbibe liberal ideology.
    • Its implementation would thus support the national integration.

    Hurdles to UCC implementation

    • There are practical difficulties due to religious and cultural diversity in India.
    • The UCC is often perceived by the minorities as an encroachment on religious freedom.
    • It is often regarded as interference of the state in personal matters of the minorities.
    • Experts often argue that the time is not ripe for Indian society to embrace such UCC.

     UCC vs. Right to Freedom of Religion

    • Article 25 lays down an individual’s fundamental right to religion;
    • Article 26(b) upholds the right of each religious denomination or any section thereof to “manage its own affairs in matters of religion”;
    • Article 29 defines the right to conserve distinctive culture.
    • An individual’s freedom of religion under Article 25 is subject to “public order, health, morality” and other provisions relating to FRs, but a group’s freedom under Article 26 has not been subjected to other FRs.
    • In the Constituent Assembly, there was division on the issue of putting UCC in the fundamental rights chapter. The matter was settled by a vote.
    • By a 5:4 majority, the fundamental rights sub-committee headed by Sardar Patel held that the provision was outside the scope of FRs and therefore the UCC was made less important.

    Enacting and Enforcing UCC: A reality check

    • Fundamental rights are enforceable in a court of law.
    • While Article 44 uses the words “the state shall endeavor”, other Articles in the ‘Directive Principles’ chapter use words such as “in particular strive”; “shall, in particular, direct its policy”; “shall be an obligation of the state” etc.
    • Article 43 mentions “state shall endeavor by suitable legislation” while the phrase “by suitable legislation” is absent in Article 44.
    • All this implies that the duty of the state is greater in other directive principles than in Article 44.

    What are more important — fundamental rights or directive principles?

    • There is no doubt that fundamental rights are more important.
    • The Supreme Court held in Minerva Mills (1980): Indian Constitution is founded on the bedrock of the balance between Parts III (Fundamental Rights) and IV (Directive Principles).
    • To give absolute primacy to one over the other is to disturb the harmony of the Constitution.
    • Article 31C inserted by the 42nd Amendment in 1976, however, lays down that if a law is made to implement any directive principle, it cannot be challenged on the ground of being violative of the FRs under Articles 14 and 19.

    What about Personal Laws?

    • Citizens belonging to different religions and denominations follow different property and matrimonial laws which are an affront to the nation’s unity.
    • If the framers of the Constitution had intended to have a UCC, they would have given exclusive jurisdiction to Parliament in respect of personal laws, by including this subject in the Union List.
    • But “personal laws” are mentioned in the Concurrent List.

    Various customary laws

    • All Hindus of the country are not governed by one law, nor are all Muslims or all Christians.
    • Muslims of Kashmir were governed by a customary law, which in many ways was at variance with Muslim Personal Law in the rest of the country and was, in fact, closer to Hindu law.
    • Even on registration of marriage among Muslims, laws differ from place to place.
    • In the Northeast, there are more than 200 tribes with their own varied customary laws.
    • The Constitution itself protects local customs in Nagaland. Similar protections are enjoyed by Meghalaya and Mizoram.
    • Even reformed Hindu law, in spite of codification, protects customary practices.

    Minority opinion in the Constituent Assembly

    • Some members sought to immunize Muslim Personal Law from state regulation.
    • Mohammed Ismail, who thrice tried unsuccessfully to get Muslim Personal Law exempted from Article 44, said a secular state should not interfere with the personal law of people.
    • B Pocker Saheb said he had received representations against a common civil code from various organizations, including Hindu organizations.
    • Hussain Imam questioned whether there could ever be uniformity of personal laws in a diverse country like India.
    • B R Ambedkar said, “no government can use its provisions in a way that would force the Muslims to revolt”.
    • Alladi Krishnaswami, who was in favor of a UCC, conceded that it would be unwise to enact UCC ignoring strong opposition from any community.
    • Gender justice was never discussed in these debates.

     Conclusion

    • Article 44 of the Constitution creates an obligation upon the State to endeavour to secure for citizens a Uniform Civil Code throughout the country.
    • The purpose behind UCC is to strengthen the object of “Secular Democratic Republic” as enshrined in the Preamble of the Constitution.
    • This provision is provided to effect the integration of India by bringing communities on the common platform on matters which are at present governed by diverse personal laws.
    • Hence UCC should be enforced taking into confidence all the sections of Indian society.
    • Goa’s Portuguese Civil Code of 1867 is an example of a common family law existing in harmony.

     

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  • How I cleared UPSC Prelims by Following this Approach in the Last 4 Months? || Free Live Webinar by Civilsdaily Mentor & UPSC-CSE 2017 Topper Megha Gupta || Limited Slots, Register Now

    How I cleared UPSC Prelims by Following this Approach in the Last 4 Months? || Free Live Webinar by Civilsdaily Mentor & UPSC-CSE 2017 Topper Megha Gupta || Limited Slots, Register Now

    Are you at that stage of prelims preparation where you are devoting 50-60% of your time in solving MCQs and test series? While, some of you might be scoring above 100 marks, others might be struggle to answer questions effectively.

    While answering an MCQ, are you able to atleast eliminate two options correctly, but are confused with the rest two? Are you finding it difficult to recall the required information within 1-2 minutes of reading a question? Do you think you are making mistakes while interpreting the meaning of a question? Certainly, there are keywords that change the entire meaning of the question which you need to look for.

    Open to All, Free Live Webinar by UPSC 2017 Topper & Civilsdaily mentor Megha Gupta Ma’am

    In the last four months, many aspirants make notes that will help them revise the important facts of a topic right before an exam. Are you on it already? Have you taken notes on the important judgements of this year, the constituional amendments, the wildlife conventions, sancturies and the international rankings of this year? If not, how must you go about this?

    When it comes to current affairs sources, online reports and standard books, it’s not only important what to read but how to read them as well. Since, there are many crash course study materials in the market, which are the reliable ones? If you haven’t yet started preparation for a subject, how should you read it’s book effectively to be able to cover the entire syllabus within a week?

    If you are yet to find answers to all these questions and want to know the roadmap for the next four months of your UPSC-CSE Prelims preparation then you must register for the free live webinar by UPSC-CSE AIR 674 2017 Topper and Civilsdaily Mentor Megha Gupta Ma’am.

    What will you learn in this free live UPSC Prelims Webinar by Megha Gupta Ma’am?

    1. What are the changes you need to make in your prelims preparation if you are unable to score well?

    2. What are the high weightage topics in CSAT which can fetch you maximum marks?

    3. What are the online and offline revision materials one needs to study right now?

    4. How to make notes from Prelims persepective right now?

    5. What are the study technqiues you must use in the last 4 months of Prelims and what should you avoid?

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    7. What are the methods to recall information while reading a tricky question in the exam hall? (With live demonstration)

    Webinar Details

    Study hard, break your limits. Then, get used to it. That’s how you prepare for UPSC-CSE. We hope this webinar will help all 2022 aspirants implement the suggestions of Megha Gupta Ma’am.

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    Time: 7 P.M

  • Import Ban on Drones

    The Government has banned the import of drones barring for R&D, defense, and security purposes.

    Why in news?

    • To promote Make-in-India drones.
    • Before this order, the import of drones was “restricted” and needed prior clearance of the Directorate General of Civil Aviation (DGCA) and an import license from DGFT.

    India’s sources of Imports

    • For its defense needs, India imports from Israel and the US.
    • Consumer drones such as those used for wedding photography come from China and drones for light shows also come from China apart from Russia.

    Why need drones?

    • Indian drone manufacturers and service providers arrange drones for a variety of use cases such as survey and mapping, security and surveillance, inspection, construction progress monitoring, and drone delivery.

    What does the order say?

    • The Directorate General of Foreign Trade (DGFT) issued an order prohibiting with immediate effect the import of drones in Completely-Built-Up (CBU), Semi-knocked-down (SKD), or Completely-Knocked-down (CKD) forms.
    • Import of drones by government entities, educational institutions recognized by the Central or State governments, government-recognized R&D entities, and drone manufacturers for R&D purposes as well as for defense and security purposes will be allowed.
    • For this, there has to be an import authorization obtained from the DGFT.
    • The import of drone components is “free”, implying that no permission is needed from the DGFT allowing local manufacturers to import parts like diodes, chips, motors, lithium-ion batteries, etc.

    Steps taken to promote indigenous drone manufacturing

    • In August last year, the Government brought out liberalized Drone Rules, 2021 which reduced the number of forms to be filled to seek authorization from 25 to five.
    • They also dispensed with the need for security clearance before any registration or issuance of the license.
    • R&D entities too have been provided blanket exemption from all kinds of permissions, and restrictions on foreign-owned companies registered in India have also been removed.
    • The Government has also announced a production-linked incentive scheme for drones and drone components with the aim to make India a “global drone hub by 2030”.
    • Foreign manufacturers will be encouraged to set up assembly lines in India.

    Why such a blanket ban?

    • Most drone manufacturers in India assemble imported components in India, and there is less manufacturing.
    • The import ban will ensure that an Indian manufacturer has control of the IP, design, and software which gives him or her a total understanding and control of the product.
    • Over a period of time, this can enable further indigenization.

    Possible repercussions of the ban

    • The ban is likely to hurt those who use drones for photography and videography for weddings and events.
    • These drones primarily come from China because they are cheaper and easy to use and India still has a lot of catching up to do in manufacturing them.

    Also read

    [Sansad TV] Perspective: Keeping Drones in Check

     

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  • Centre extends Police Modernisation Scheme

    The Union government has approved the continuation of a police modernization scheme for five years up to 2025-26 with a financial outlay of ₹26,275 crores.

    What is the Modernization of Police Forces Scheme?

    • Police’ and ‘law and order’ fall under the category of subjects within the domain of the State as per Entry 2 of List II of the VIIth Schedule in the Constitution of India.
    • Thus, the principal responsibility for managing these subjects lies with the State Governments.
    • However, the States have not been able to fully modernize and equip their police forces up to the desired level due to financial constraints.
    • It is in this context that the Ministry of Home Affairs (MHA) has been supplementing the efforts and resources of the States, from time to time, by implementing the MPF Scheme since 1969-70.

    Objectives:

    • The focus of the scheme is to strengthen police infrastructure at cutting edge level by constructing secure police stations, training centers, police housing (residential), equipping the police stations with the required mobility, modern weaponry, communication equipment, and forensic set-up, etc.

    Components of the scheme

    • The scheme included security-related expenditure in J&K, northeastern States, and Maoist-affected areas, for raising new battalions, developing high-tech forensic laboratories and other investigation tools.
    • Provisions have been made under the scheme for internal security, law and order, and the adoption of modern technology by the police.
    • Assistance will be given to the States for narcotics control and strengthening the criminal justice system by developing a robust forensic setup in the country.

    Funding pattern

    • Under the Scheme, the States are grouped into two categories, namely Category ‘A’ and Category ‘B’ for the purpose of funding both under ‘Non-Plan’ and Plan.
    • Category ‘A’ States, namely, J&K and 8 North Eastern States including Sikkim will be eligible to receive financial assistance on a 90:10 Centre: State sharing basis.
    • The remaining States will be in Category ‘B’ and will be eligible for financial assistance on a 60:40 Centre: State sharing basis.

     

     

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  • Capital Gains Tax

    The capital gains tax structure in India is complicated, and it is time for a relook since the union budget has provisions for 30% tax on cryptocurrency.

    What is Capital Gains Tax?

    • Capital gains tax is levied on the profits made on investments.
    • It covers real estate, gold, stocks, mutual funds, and various other financial and non-financial assets.

    Types

    • It is divided into long-term capital gains tax (LTCG) and short-term capital gains tax (STCG) depending on how long you have held the investment in question.
    • Unlike income tax, the percentage of tax does not change on the basis of your overall tax slab.
    • The LTCG tax, excluding surcharge, on equity is the same for gains of ₹10 lakh or ₹10 crore.
    • There is also a separate set of deductions that apply to LTCG, which do not apply to ordinary income.

    Why is it so complicated?

    Capital gains tax is complicated for a few primary reasons.

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

    Is cryptocurrency taxed as capital gains?

    • The 2022 budget has proposed a 30% tax on cryptocurrency, which is higher than capital gains tax in many cases.
    • Besides, under capital gains tax, investors can adjust profits and losses on different investments against each other or against profits/losses in the future.
    • However, this cannot be done with cryptocurrency.

    What distortions does it create?

    • As capital gains tax is the same regardless of your overall income it can compound inequality.
    • For instance, a person with a salary of ₹40 lakh will pay 30% tax on it but just 10% LTCG tax on gains from stock trading.
    • A person with a salary of ₹5 lakh will pay a 5% tax on it but the same 10% LTCG tax on stock trading.
    • Second, the smaller one-year qualifying period for LTCG in stocks compared to three years in debt mutual funds may encourage short-term trading in equity.

    What can be done to fix these anomalies?

    • The government can bring about uniformity in rates and holding periods for various assets to ensure that the tax for one asset is not more attractive than another.
    • A uniform and long holding period to qualify for LTCG can also discourage short-term trading and speculative  behavior  in assets  such as  stocks.
    • The exemptions for LTCG such as reinvestment in another house property or capital gains bonds can also be made simpler, with fewer conditions.
    • Small investors can also be given relief by reducing rates of capital gains.

     

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  • What are Earth Observation Satellites (EOS)?

    After a disappointing 2021 which saw just one successful launch, ISRO is getting back to business with the EOS-04, an earth observation satellite.

    What are EOS?

    • An EOS or Earth remote sensing satellite is a satellite used or designed for Earth observation (EO) from orbit.
    • It includes spy satellites and similar ones intended for non-military uses such as environmental monitoring, meteorology, cartography, and others.
    • The most common type is Earth-imaging satellites that take satellite images, analogous to aerial photographs.
    • Some EOS may perform remote sensing without forming pictures, such as in GNSS radio occultation.

    What is EOS-04 all about?

    • The EOS-04 is fourth in a series of earth observation satellites that are being launched under a new generic name.
    • It is designed to provide high-quality images for applications such as agriculture, forestry, and plantations, flood mapping, soil moisture, and hydrology.
    • It will complement the data from Resourcesat, Cartosat and RISAT-2B series of satellites that are already in orbit.

    Why such different nomenclature?

    • Two years ago, ISRO had moved to a new naming system for its earth observation satellites which till then had been named thematically, according to the purpose they were meant for.
    • The Cartosat series of satellites were meant to provide data for land topography and mapping, while the Oceansat satellites were meant for observations overseas.
    • Some INSAT-series, Resourcesat series, GISAT, Scatsat, and a few other earth observation satellites were named differently for the specific jobs they were assigned to do, or the different instruments that they.
    • All these would now become part of the new EOS series of satellites.

    What other satellites are being launched?

    • Besides EOS-04, two other small satellites —INSPIREsat-1 and INS-2TD — will ride on the heaviest version of the PSLV rocket in the early hours from the Sriharikota launch range.
    • The other co-passenger, INS-2TD, is a technology demonstrator for the first India-Bhutan joint satellite that is scheduled to be launched next month.
    • The two countries had signed a space agreement last year, and its first outcome would be the launch of Bhutan-Sat, or INS-2B, on a PSLV rocket.

    How many satellites does India have in space?

    • India currently has 53 operational satellites, of which 21 are earth observation ones and another 21 are communication-based.
    • EOS-4 launch would be the 54th flight of the PSLV rocket, and the 23rd of its most powerful XL-version that has six strap-on boosters.

     

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  • World Food Programme (WFP)

    India signed an agreement with the United Nation’s World Food Programme (WFP) for the distribution of 50,000 tonnes of wheat that it has committed to sending Afghanistan as part of humanitarian assistance.

    What is WFP?

    • The WFP is the food-assistance branch of the United Nations (UN).
    • It is the world’s largest humanitarian organization focused on hunger and food security, and the largest provider of school meals.
    • Founded in 1961, it is headquartered in Rome and has offices in 80 countries.
    • In addition to emergency food relief, WFP offers technical assistance and development aid, such as building capacity for emergency preparedness and response, managing supply chains and logistics, etc.
    • The agency is also a major provider of direct cash assistance and medical supplies and provides passenger services for humanitarian workers.

    Feats achieved

    • As of 2020, it served 115.5 million people in 80-plus countries, the largest since 2012.
    • The WFP was awarded the Nobel Peace Prize in 2020 for its efforts to provide food assistance in areas of conflict and to prevent the use of food as a weapon of war and conflict.

    WFP in Afghanistan

    • The wheat will be taken through Pakistan to the Afghan border crossing and handed over to WFP officials in Kandahar.
    • The WFP runs its own logistics network inside Afghanistan, partnering with civil society groups.

     

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  • Places in news: Chandernagore

    The Registry Building, a two-storey structure at Chandernagore built in 1875 and a symbol of French settlement of the colonial town, has been awaiting restoration for a long time.

    French in India

    • France was the last of the major European maritime powers of the 17th century to enter the East India trade.
    • The French settlement in India began in 1673 with the purchase of land at Chandernagore from the Mughal Governor of Bengal.
    • The next year they acquired Pondicherry from the Sultan of Bijapur. Both became the centers of maritime commercial activities of the French in India.
    • Joseph Francois Dupleix who was initially appointed as Intendent of Chandernagore in 1731, sowed the seeds of colonization.
    • The village, which hitherto was engaged in maritime commerce along with Pondicherry, got fortified by him.

    Significance of Chandernagore

    • Chandernagore, though a part of French colonies in India, was unique in many ways.
    • It was very active in spearheading the freedom movement against the British. Due to its close proximity to Calcutta, it became a safe haven for freedom fighters of all hues.
    • Even Aurobindo Ghosh who was one of the accused in the Alipore Bomb case of 1909, was acquitted unconditionally and after a short stay at Chandernagore moved to Pondicherry.
    • Since the partition of Bengal in 1905, Chandernagore was in the thick of activities of freedom fighters against the British and produced several martyrs including Kanailal Dutt.

    Merger into India

    • As the British decided to hand over powers to the people of India by August 15, 1947, the people living under French rule in Pondicherry, Chandernagore, Karaikal, Mahe and Yanam were eager to join their homeland.
    • But the French were yet to learn their lessons. They tried all the tricks in the book to avert this.
    • Facing the onslaught from the people under their rule and the British and Indian rulers, the French declared Chandernagore as free city in 1947.
    • In June 1948, they conducted a referendum in which an overwhelming majority of 97 per cent people opted for a merger with India.
    • After so many legal hurdles, it became a part of India on October 2, 1955.

    Back2Basics: European Colonies in India

     

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