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  • [pib] Fertilizer Subsidy in India

    A historic decision was taken to increase the subsidy for DAP fertiliser from Rs. 500 per bag to Rs. 1200 per bag, which is an increase of 140%.

    Hike in subsidies

    • It was discussed that the price of fertilizers is undergoing an increase due to the rising prices of phosphoric acid, ammonia etc internationally.
    • Despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs.1200 and the central government has decided to bear all the burden of price hike.
    • The amount of subsidy per bag has never been increased so much at once.

    Fertilizer Subsidy in India

    • Subsidy as a concept originated during the Green Revolution of the 1970s-80s.
    • Fertiliser subsidy is purchasing by the farmer at a price below MRP (Maximum Retail Price), that is, below the usual demand-and-supply-rate, or regular production and import cost.
    • Fertiliser subsidy ultimately goes to the fertiliser company, even though it is the farmer that benefits.
    • Before 2018, companies were reimbursed after the material was dispatched and received by the district railhead or designated godown.
    • 2018 saw the beginning of DBT (Direct Benefit Transfer), which would transfer money directly to the retailer’s account.
    • However, the companies will be paid only after the actual sale to the farmer.

    Put answers in the comment box for this PYQ:

    Q.What are the advantages of fertigation in agriculture? (CSP 2020)

    1.Controlling the alkalinity of irrigation water is possible.
    2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
    3. Increased availability of nutrients to plants is possible.
    4. Reduction in the leaching of chemical nutrients is possible.

    Select the correct answer using the code given below:
    (a) 1, 2 and 3 only

    (b) 1,2 and 4 only

    (c) 1,3 and 4 only

    (d) 2, 3 and 4 only

    How is the subsidy paid and who gets it?

    • The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer who pays MRPs less than the market-determined rates.
    • Companies, until recently, were paid after their bagged material had been dispatched and received at a district’s railhead point or approved godown.
    • From March 2018, a new so-called direct benefit transfer (DBT) system was introduced, wherein subsidy payment to the companies would happen only after actual sales to farmers by retailers.
    • With the DBT system, each retailer — there is over 2.3 lakh of them across India — now has a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.

    How does this system work?

    • A popular example of how this system works is that of the neem coated urea fertiliser.
    • Its MRP (Maximum Retail Price) is fixed by the government at Rs. 5922.22 per tonne.
    • The average cost of domestic production is at Rs 17,000 per tonne. The difference is footed by the centre in the form of subsidy.
    • This fertiliser has high Nitrogen content and is cheaper than usual fertilizers.
    • While this may be perceived as a good thing, excess of Nitrogen can disrupt the NPK (Nitrogen, Phosphorus and Potassium) balance in the soil.

    What about non-urea fertilizers?

    • The non-urea fertiliser is decontrolled or fixed by the companies.
    • However, the government pays a flat per tonne subsidy to maintain the nutrition content of the soil, and ensure other fertilizers are economical to use.
    • The non- urea fertilizers are further divided into two parts, DAP (Diammonium Phosphate) and MOP (Muriate of Phosphate).

    Issues with such subsidies

    • A flawed subsidy policy is harmful not just for the farmer, but to the environment as well.
    • Indian soil has low Nitrogen use efficiency, which is the main constituent of Urea. Consequently, excess usage contaminates groundwater.
    • The bulk of urea applied to the soil is lost as NH3 (Ammonia) and Nitrogen Oxides. The WHO has prescribed limits been breached by Punjab, Haryana and Rajasthan.
    • For human beings, “blue baby syndrome” is a common side ailment caused by Nitrate contaminated water.
    • This hampers the ability of the body to carry Nitrogen, with a high probability of death.

  • [pib] GI certified Gholvad Sapota

     

    In a major boost to exports of Geographical Indication (GI) certified products, a consignment of Dahanu Gholvad Sapota from the Palghar district of Maharashtra was shipped to the United Kingdom.

    Gholvad Sapota

    • GI certification of Ghovad Sapota is held by Maharashtra Rajya Chikoo Utpadak Sangh and the fruit is known for its sweet and unique taste.
    • It is believed that the unique taste is derived from the calcium-rich soil of Gholvad village.
    • Currently, in the Palgahr district, around 5000 hectares of land is under sapota or plantation.
    • Sapota is grown in many states- Karnataka, Gujarat, Maharashtra, Tamil Nadu, West Bengal and Andhra Pradesh.
    • Karnataka is known to be the highest grower of the fruit, followed by Maharashtra.

    Do you know?

    Earlier this month, a consignment of 2.5 Metric Tonne of GI certified Banganapalli & Survarnarekha mangoes sourced from farmers in Krishna & Chittor districts of Andhra Pradesh was exported to South Korea.

    Back2Basics: Geographical Indication (GI)

    • The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
    • GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
    • Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
    • They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

  • Issues in Social Security Code 2020

    Provisions in Social Security Code 2020

    • India’s Parliament in September 2020 passed a Social Security Code (SS Code 2020).
    • The SS Code 2020 merges existing social security laws and attempts to include informal workers within the ambit of social security administration.
    • The SS Code 2020 amalgamates and rationalises the provisions of eight existing central labour laws.
    • Of these acts, employees provident fund, employees state insurance (ESI), maternity benefit, gratuity are entirely for organised sector workers. 
    • Employee threshold removed: For employees’ state insurance, the existing employee threshold has been withdrawn.
    • Now the central government can extend ESI benefits to any organisation irrespective of the number of workers employed.

    Key benefits not available to informal workers in Social Security Code 2020

    • Maternity benefit: Under the SS Code, the provision of maternity benefit has not been made universal.
    • Maternity benefit is presently applicable for establishments employing 10 workers or more.
    • The definition of ‘Establishment’ in the proposed code did not include the unorganised sector.
    • Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
    • Employees Provident Fund: The SS Code maintains that the Employees’ Provident Fund Scheme will remain applicable, as before, to every establishment in which 20 or more employees are employed.
    • Thus, for informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
    • Payment of gratuity: Gratuity shall be payable to eligible employees by every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding 12 months.
    • But although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.

    Challenges faced by informal workers in availing social security

    • Registration barrier: To avail social security, an informal worker must register herself on the specified online portal to be developed by the central government.
    • Absence of definition: The absence of definite and unambiguous provisions in the present code would further complicate achievement of universal registration.
    • Lack of awareness: Experience shows that there is an awful lack of awareness among informal workers regarding social security schemes.
    • Lack of digital literacy: Online registration places a further challenge as most informal workers lack digital literacy and connectivity.
    • Lack of documents: Informal workers also find it difficult to furnish all documentary papers required as part of the registration process.
    • Furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is very difficult.
    • Such requirements deter informal workers from completing the registration and they continue to remain outside the social security ambit.

    Way forward

    The provision of social security could be used to formalise the workforce to a certain extent. Employers could have been made to own up to the responsibility of providing social security to their workers.

    1) Inter-State cooperation

    • As unorganised workers are spread across the length and breadth of India, inter-State arrangement and cooperation becomes imperative.
    • The central government should conceptualise a basic structure, which if successful, should be adopted by States after necessary customisation.

    2) Universal coverage

    • The unorganised workforce is all encompassing, minus the minuscule regular workers of organised sectors.
    • This identity should be primal and all unorganised workers should have basic social security coverage, irrespective of labour market classifications.
    • The code fails to undertake such inclusion in a meaningful way.

    Conclusion

    The Social Security Code fails to provide adequate protection to informal workers, who constitute 91% of the workforce. The pandemic and misery brought by it on these informal workers highligths the need for universal social security.

  • Divesting States of the power to determine backwardness hits federalism

    The article highlights the issues with the Supreme Court judgement in the Maratha reservation case.

    Three findings from Maratha reservation judgement

    • Recently, the Supreme Court of India declared as unconstitutional a Maharashtra law which provided for reservation to the Maratha community.
    • Three primary findings emanated from the judgement-
    • 1) Maratha not backward class: The Court held that the Maratha community did not constitute a socially and educationally backward class.
    • 2) Breach of 50% limit: The bench said that the law was in breach of a rule previously set by the Court disallowing reservations made in excess of 50% of the total available positions.
    • 3) Power of the States: The Court held that State governments had no independent power to declare a group as a backward class.

    Issues with the judgement

    The latter two findings run against the values of equality and federalism, which the Court has long regarded as integral to India’s democracy.

    1)  50% limit does not stem from the Constitution

    • Articles 16(4) and 15(4) which confer power on the government to make reservations do not contains 50% limitation.
    • Reservation as an exception: Originally, however, these clauses were seen by the Supreme Court as exceptions to a broad rule of formal equality envisioned by the Constitution.
    • To that end, the Court held that to allow reservation in excess of 50% would lead to an exception overriding a rule. 
    • Reservation as basic guarantee: Countering the reservations as an exception position, a seven-judge Bench, in State of Kerala vs N.M. Thomas (1975), held that a programme of reservation was inherent in the Constitution’s basic guarantee of equal treatment.
    • This judgment held that affirmative action by the state was compelled by an objective of attaining substantive equality.
    • With this judgement the rule requiring that reservations stay under 50% ought to have been deemed incongruous.
    • But when the Court sat as a nine-judge Bench in Indra Sawhney vs Union of India (1992) it sustained the 50% limit.
    • The majority on the Bench ruled, on the one hand, that N.M. Thomas was correct in seeing reservations as embedded in a constitutional vision of substantive equality.
    • On the other hand, the bench accepted that reservation made in excess of 50%, barring exceptional circumstances, was harmful to that very vision. 

    2) Interpretation of 102nd Amendment curtails the powers of the State governments to declare groups as backward

    • After Indra Sawhney judgement, the determination of backward classes was made by the National Commission for the Backward Classes, at the level of the Centre, and by regional commissions at the level of the State governments.
    • This division in power, gave States autonomy to classify groups as backward.
    • In contrast, the power to prepare lists of Scheduled Castes and Scheduled Tribes, vested solely with the Union government.
    • The 102nd Amendment (2018), introduced Article 342A.
    • Article 342A stipulated that the President of India may, after consultation with the State government, notify groups of persons within such a State who are deemed to be socially and educationally backward.
    • Any such “Central List”, the clause clarified, could only be altered by Parliament.
    • Article 366(26C) was also added, and “socially and educationally backward classes” was defined as “such backward classes as are so deemed under Article 342A for the purposes of this Constitution”.
    • In interpreting these changes, a majority in the Maratha reservation judgement concluded that the power for determination of other backward classes rests solely with the Centre.

    How this interpretation goes against the federalism

    • This interpretation of 102nd Amendment altogether dispossess States from exercising a time-honoured authority.
    • But yet the amendment, in the Court’s belief, did not violate the Constitution’s basic structure.
    • This was because, according to the majority, the alterations neither took away “the very essence of federalism” nor denuded the States of their effective power to legislate.
    • But divesting states of power this critical, to classify groups as backward, entitling many communities to protection under Articles 15(4) and 16(4) is offensive to the “essence” of federalism.
    • The changes, as interpreted by the Court, directly impede the ability of States to secure just social order.

    Consider the question “What are the implications for the States of the interpretation of the 102nd Amendment by the Supreme Court in the Maratha reservation case?” 

    Conclusion

    It is imperative that Parliament amend the Constitution and grants to States an express power to determine backwardness. Any other result will offend the delicate balance at the heart of Indian federalism.

  • THE BRUCE LEE MANTRA

    THE BRUCE LEE MANTRA

    “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”

    You must have read this famous quote by Bruce Lee. There is a reason why Bruce lee became one of the most renowned martial arts fighter in the world. This quote by him emphasizes the importance of focused practice and a high level of proficiency. 

    Just like Bruce Lee, Practice and Proficiency can be ingredients for your success story as well.

    NO! WE ARE NOT ASKING YOU TO BECOME SOME WORLD CHAMPION, LET US LEAVE IT FOR ANOTHER DAY. But using the Bruce Lee mantra can help you with your UPSC CSE examination for sure.

    Remember PRACTICE doesn’t mean repeating the same mistakes every time but it means ASSESSING your flaws and improving every time!

    In our previous blogs, we have talked about Inconsistency and Incomplete syllabus attempts. In this blog, let us tackle the third major problem that students face – LACK OF ASSESSMENT.

    Despite finishing the syllabus and revising basic books, many students score average in prelims and mains. So, WHAT IS MISSING HERE? If you are not assessing your performance on a regular basis and practicing in an aimless way then I am sorry to say YOUR CHANCES OF CLEARING THIS PAPER ARE LESS.

    In our interaction with 8000+ students, Lack of assessment as an issue that manifests in many ways:

    AIMLESS MOCKS: You have heard toppers say that practice as many mocks and write as many papers as possible. But APPLY LOGIC here if you are not analyzing your mistakes and attempting the tests in the same manner then you are just practicing the same mistakes over and over again. You need a mentor not only to push you to practice more but at the same time provide you with the right assessment after each test.

    DISCIPLINE: Rome was not built in one day. Similarly, your assessment is not a one-time activity. Aspirants make the mistake of thinking that assessment is limited to getting feedback on your mains copy. Nope! not that simple. Your mentor has to work with you on a regular basis to analyze your performance. This will ensure that if you are getting unproductive, we can bring you back in the right direction as soon as possible.

    ACCOUNTABILITY: Self-accountability is necessary for this examination. But if you are also accountable to a mentor then your efficiency levels can improve faster. Don’t believe us, try it yourself.

    Already an aspirant is burdened with so much syllabus and mock tests, because of which assessment suffers. Give our Mentorship program a chance. Neutral assessment of your preparation in terms of finishing the syllabus, revision and test results can be a game-changer in your preparation.

    Let our mentors focus on your assessment, you just focus on your studies. Fill the SAMANVAYA form given below and we will contact you.

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  • 20th May 2021 | Prelims Daily with Previous Year Questions

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  • MAINS ESSENTIAL PROGRAM SUPER 50 BATCH || ENROL TODAY || LIMITED SEATS

    DON’T DELAY YOUR ANSWER WRITING ANY FURTHER.

    PROGRAM STARTS 30th MAY 2021.

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    The postponement of UPSC prelims 2021 examination,

    Gives you an opportunity

    to get back in the game if you lost your days because of covid

    to cover up the gaps in your prelims

    to strengthen your MAINS SKILLS.

    You have been provided with a 5-MONTH window before prelims. And the fact about prelims is that it is the key to write mains but will not help you get a rank. So, take the next 2 months to polish yourself for the real deal.

    To keep your Answer writing game one step ahead, Civilsdaily is introducing Mains essential super 50 batch.

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    What is MEP SUPER 50?

    Mains Essential Program Super 50 2021 is a personalised and Mentor guided comprehensive and intensive program for GS Mains papers. The focus is on making students understand the requirement of Mains Question, its elements, using information, and imparting answer writing skills for that.

    MEP Super 50 is inspired by our successful initiative of Smash Mains.

    Our previous year’s SMASH Mains tests have had an exceptional hit ratio in 2020 UPSC Mains.

    In 2020, 80% of students in our smash mains program were able to clear the mains examination. But to enroll in smash mains, you have to be a veteran who has written mains plus there is a review process. 

    Mep super 50 is open to all, even freshers. After having worked with so many students, we can say with utmost surety that personalized guidance can help improve your score in mains by 50-100 MARKS.

    The idea behind keeping 50 limited seats is to provide dedicated attention to all the enrolled candidates. Quality over quantity is our motto.

    PROGRAM INCLUSION:

    1. 8 Sectional tests: The whole syllabus will be divided into portions like history, economics and geography. This will ensure that even your basic static preparation and current affairs for prelims are revised alongside your mains answer writing program. Killing two birds with one stone!

    2. 12 Full-length tests: After the prelims, it is time to go full gear.

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    4. Habitat handholding: A special group created on habitat where you can put up your doubts and queries. Also can be used to interact with peers on strategies to improve your mains writing. You can also contact mentors like Sajal sir, Sukanya ma’am, Sudhanshu sir and Ajay sir. They all have interview-level experience, so utilize their experience to your benefit.

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    Our Philosophy behind MEP Super 50

    1. Question Formulation

    It happens under a team of experienced Civilsdaily’s faculty. Questions framed are from the most important UPSC relevant themes and papers are based on the latest pattern of UPSC.

    Our questions specifically state:

    • Whether they are straightforward or thought-provoking/analytical.
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    CD Innovation – Star marked questions We go the extra mile and craft unique, intellectually-stimulating questions. Marked with a star, these questions reward analytical ability and critical thinking.

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    We believe in personalized individual attention. This is the biggest reason why you should join our MEP SUPER 50. Students can schedule a call within 48 hours of receiving their checked copies.

    A one-to-one discussion with Mentor will not only highlight your weaknesses but will also help in tracking your improvements over the subsequent tests.

    3. Answer Checking

    Our evaluation focusses on multiple dimensions and parameters like structure, flow, presentation, contextuality, relevance to question, analytical excellence and cross-domain inter-linkages than simply on superficial, memory-based lapses.

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    Read more about our methodology here.

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    More than just simply providing information, our model answers cover all the aspects of a question and provide enriching points to the student. They also include:

    • For ‘thought-provoking/analytical‘ type of questions, we’ll provide the best way to approach them.
    • Alternate introductions
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    • OTB – Out of the box points for additional marks

    5. Civilsdaily’s Handholding 

    Habitat is where everything comes together learning, doubt clearing, notes, references, mentor’s support, and a focussed community. You’re going to learn and discuss like never before. g. You can contact mentors like Sajal sir, Sukanya ma’am, Sudhanshu sir and Ajay sir. They all have interview-level experience, so utilize their experience to your benefit.

    How will your queries be resolved?

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    • More often than not, your peers will take part in your doubt discussions adding a lot of value.

    Besides doubts, what else is there on Habitat?

    • #DDS sessions – We have dedicated sessions every day to resolve doubts in real-time. Never keep a doubt to yourself.
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    DON’T DELAY YOUR ANSWER WRITING ANY FURTHER.

    PROGRAM STARTS 30th MAY 2021.

    ENROLL TODAY TO START EARLY.

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  • 22 May 2021 | Nikaalo Prelims Quiz- TS 18- Art and Culture Test 2: . Religion; Literature; Schools of Philosophy; Cultural Institutions; Bhakti and Sufi

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  • 20 May 2021 | Nikaalo Prelims Quiz- TS 17- Current Affairs Test 6: December 2020

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  • Cryptocurrency

    Context

    Vitalik Buterin, co-creator of the crypto network Ethereum, has made a 1 billion dollar cryptocurrency donation for India’s relief funds as the country battles the latest deadly COVID-19 wave.

    Definition

    The 2019 Bill defined cryptocurrency as any information, code, number or token, generated through cryptographic means or otherwise, which has a digital representation of value and has utility in business activity, or acts as a store of value or a unit of account. According to professionals a system must need these six points to be called a cryptocurrency system:

    • The system does not require a central authority; its state is maintained through distributed consensus.
    • The system keeps an overview of cryptocurrency units and their ownership.
    • The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
    • Ownership of cryptocurrency units can be proved exclusively cryptographically.
    • The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
    • If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

    History/Background

    • In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash. Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient.
    • In 1998, Wei Dai published a description of “b-money”, characterized as an anonymous, distributed electronic cash system.
    • Shortly thereafter, Nick Szabo described bit gold. Like bitcoin and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system which required users to complete a proof of work function with solutions being cryptographically put together and published.
    • In 2009, the first decentralized cryptocurrency, bitcoin, was created by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work
    • In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult.
    • In October 2011, Litecoinwas released. It used scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin used a proof-of-work/proof-of-stake
    • On 6 August 2014, the UK announced its Treasuryhad been commissioned a study of cryptocurrencies, and what role, if any, they could play in the UK economy. The study was also to report on whether regulation should be considered.

    Types of cryptocurrency

    • The most common and valued cryptocurrency is Bitcoin.
    • All the other cryptocurrencies other than Bitcoin are together as a set are known as alternate coins or commonly called “Altcoins”. Most famous alt coins are:-
    • Litecoin
    • Cardano
    • Polkadot
    • Stellar(XLM)
    • Binance Coin
    • By the end of March 2021 the total share of altcoins in the cryptocurrency market was estimated to be at 40% of the total market value.

    How it works?

    • Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security.

    What is Blockchain Technology?

    • Simply, blockchain is decentralized, distributed and public digital ledger.  Blockchains is a new type of network infrastructure (a way to organize how information and value move around on the internet) that create ‘trust’ in networks by introducing distributed verifiability, auditability, and consensus.
    • Blockchains create trust by acting as a shared database, distributed across vast peer-to-peer networks that have no single point of failure and no single source of truth, implying that no individual entity can own a blockchain network, and no single entity can modify the data stored on it unilaterally without the consensus of its peers.
    • New data can be added to a blockchain only through agreement between the various nodes of the network, a mechanism known as distributed consensus. Each node of the network keeps its own copy of blockchain’s data and keeps the other nodes honest – if one node changes its local copy, the other nodes can reject it.
    • Imagine a blockchain as a ledger—because that’s essentially how most blockchains function. Each block of data represents some new transaction on the ledger, whether that means a contract or a sale or whatever else you’d use a ledger for.
    • Interestingly, blockchains leverage techniques from a field of mathematics and computer science, known as cryptography, to sign every transaction (e.g. the transfer of assets from one person to another) with a unique digital signature belonging to the user who initiated the transaction.

    Advantages

    • Low transaction Fee: Because miners are simply rewarded cryptocurrency from network itself, there are typically little or no fees for core transactions.
    • Ownership: With your digital key, access to your currency is yours alone. Unlike money you store at a bank, your use of cryptocurrency cannot be frozen or limited by any entity.
    • Identity Protection: Paying with credit/debit cards requires submitting sensitive banking information that could be stolen or compromised. Cryptocurrency can be sent directly to a recipient without any information other than total amount you want to send.
    • Risk-free for sellers: Payments using Cryptocurrency can’t be reversed, which means merchants don’t have to worry about stopped payments. The blockchain makes it difficult for you to be defrauded.

    Disadvantages

    • Privacy Concerns: The privacy of users’ data is at stake. There is concern regarding privacy of users data in using cryptocurrencies as all the transaction information is stored in distributed ledger (called blockchain), which is publicly visible. Thus Hacker can easily observe how the money flows.
    • High Volatility: The price of Bitcoin suddenly rose to almost $20,000 and then dropped to $6,000. Due to such incidents, it is complicated for the investors to trust the ecosystem.
    • Destination for black money: The fear among regulators and policymakers is that cryptocurrencies, being an alternative source of value to fiat currency, could be misused to launder black money or finance terrorist activities.
    • Cybersecurity Concerns: Cryptocurrencies are prone to cybersecurity breaches and hacks. Various attacks are common, even companies and governments are not full proof to them. For example, the Swiss blockchain company, Trade.io, has reported that crypto tokens worth almost $8 million have been stolen from their cold wallet.
    • Dark activities: The possibility that the new money will nurture illicit activities and markets like drug selling, weapons etc. through Darknet is always high using cryptocurrency anonymously. It also increases the risk of its use in various terrorist activities across the border.
    • Monetary control and economic behavior: It could dramatically change global monetary policymaking. People will exchange their national currencies for the new digital coin in order to buy and sell the many products that will be priced in it. This will further impact the profit of banks and will put stress on their balance sheet.
    • Inflation: Governments and policymakers will have reduced ability to control inflation. Usually, when inflation picks up, central banks take steps to control it through various monetary rates. Cryptocurrency will be out of control of the central bank so liquidity control will be an issue.

    Cryptocurrency and India

    • The country, at present, has around 75 lakh cryptocurrency investors who have together pooled over Rs 10,000 crore into Bitcoins and other such digital currencies.
    • The prices have surged by over 900%, courtesy of the worldwide boom – a single bitcoin that used to cost around Rs 4 lakh in 2020 now costs somewhere around Rs 41 lakh now.
    • FM Nirmala Sitharaman has said that the Centre will take a “calibrated approach” and leave a window open for experiments with blockchain technology.

    Legitimacy of Cryptocurrency in India

    • Finance minister Arun Jaitley, in his budget speech on 1 February 2018, stated that the government will do everything to discontinue the use of bitcoin and other virtual currencies in India for criminal uses.
    • He reiterated that India does not recognise them as legal tender and will instead encourage blockchain technology in payment systems. “The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,” Jaitley said
    • In early 2018 India’s central bank, the Reserve Bank of India(RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI
    • In March 2020, the Supreme Court of India passed the verdict, revoking the RBI ban on cryptocurrency trade.
    • In 2021, the government is exploring the creation of a state-backed digital currency issued by the Reserve Bank of India, while banning private ones like bitcoin.

    Cryptocurrency Bill India 2019

    • Cryptocurrency cannot be used as a legal tender or currency at any place in India.
    • The bill prohibits everyone to mine, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India.
    • The central government is allowed to declare Digital Rupee to be the legal tender with the consent of Reserve Bank of India.
    • The use of Distributed Ledger Technology (DLT) for creating a network for delivery of any financial or other services or for creating value , without involving any use of cryptocurrency is not prohibited.
    • Direct or indirect use of cryptocurrency shall be punishable with fine or imprisonment of 1 year which may be extended o 10 years or both.
    • The court is empowered to transfer any fees recovered to the consolidated fund of India.
    • The central government on the recommendation of the investigating agency without being bound to it is empowered to grant immunity for any offense under this act.
    • The bill also provides that no such immunity can be granted by the central government in cases where the proceedings for any such offence have been instituted before the date of receipt of application for grant of such immunity.
    • The Bill promises to “allow for certain exceptions to promote the underlying technology of cryptocurrency (blockchain) and its uses.”
    • The way the technology is built, an ownerless, consensus-driven, distributed ledger like a blockchain needs cryptocurrency to grease its wheels.

    International Scenario

    United states of America

    • The U.S. has the highest number of cryptocurrency users, the highest number of Bitcoin ATMs and also the highest Bitcoin trading volumes globally.
    • The US government, in 2013, accepted bitcoin as a decentralized virtual currency that can be used for performing transactions. It was classified as a commodity by CFTC in September 2015.
    • Bitcoin is also taxable as a property. To sum up, bitcoin is legal in the USA, however, there is no clarification about the legalization of other cryptocurrencies.

    Japan

    • Japan has eliminated the consumption tax on Bitcoin trading on April 1, 2017, when it officially declared Bitcoin as a legal tender. Japan also eliminated the possibility of double taxation on trading of Bitcoins.
    • Japan is now widely considered a hub for cryptocurrency trading/exchange in Asia.

    Canada

    • Bitcoin is viewed as a commodity by the Canada Revenue Agency (CRA).  This means that Bitcoin transactions are viewed as barter transactions, and the income generated is considered as business income. The taxation also depends on whether the individual has a buying-selling business or is only concerned with investing.
    • Canada considers Bitcoin exchanges to be money service businesses. This brings them under the purview of the anti-money laundering (AML) Bitcoin exchanges need to register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
    • In addition, some major Canadian banks have banned the use of their credit or debit cards for Bitcoin transactions.

    European Union

    • On Oct. 22, 2015, the European Court of Justice (ECJ) ruled that buying and selling digital currencies is considered a supply of services, and that this is exempt from value-added tax (VAT)in all European Union (EU) member states.
    • Some individual EU countries have also developed their own Bitcoin stances.
    • In Finland, the Central Board of Taxes (CBT) has given Bitcoin a VAT exempt status by classifying it as a financial service. Bitcoin is treated as a commodity in Finland and not as a currency.
    • The National Revenue Agency (NRA) of Bulgaria has also brought Bitcoin under its existing tax laws.
    • Germany is open to Bitcoin; it is considered legal but taxed differently depending upon whether the authorities are dealing with exchanges, miners, enterprises, or users.

    China

    • Bitcoin is essentially banned in China. All banks and other financial institutions like payment processors are prohibited from transacting or dealing in Bitcoin. Cryptocurrency exchanges are banned.
    • The government has cracked down on miners.

    Way Forward

    • A worldwide regulatory authority must be established to control the volatility, security and inflation of the cryptocurrency market.
    • While the number of merchants who accept cryptocurrencies has steadily increased, they are still very much in the minority. For cryptocurrencies to become more widely used, they have to first gain widespread acceptance among consumers.
    • The more popular they become, the more regulation and government scrutiny they will likely to attract, which erodes the fundamental premise for their existence. And therefore the central authority must be made so in keeping mind that the fundamental of the cryptocurrency existence must not be mended.
    • For cryptocurrencies to become part of the mainstream financial system must :
      • Be made mathematically complex (for frauds and hackers) but graphically easy for the users to make them understand better.
      • Be Decentralized but with adequate consumer safeguards and protection.
      • Preserve user anonymity without being a conduit for tax evasion, money laundering and other nefarious activities.

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