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Subject: Economics

  • Z-Morh tunnel to be ready in April

    tunnel

    The crucial Z-Morh tunnel that connects Gagangir and Sonamarg on the Srinagar-Leh highway will be inaugurated next month in April.

    What is Z-Morh tunnel?

    • Z-Morh tunnel, also known as the Zoji-Morh Tunnel, is an under-construction tunnel located in the Indian state of Jammu and Kashmir.
    • The tunnel is being constructed at an elevation of 11,578 feet and is expected to provide all-weather connectivity to the Kashmir Valley.

    Location

    • The Z-Morh tunnel is located on National Highway 1D, which is the only road that connects the Kashmir Valley to the rest of India.
    • The tunnel is being constructed in the Zoji-Morh region, which is a high-altitude mountain pass located on the Srinagar-Leh Highway.

    It’s Construction

    • The Z-Morh tunnel is being constructed at a length of 6.5 km and is expected to be completed at a cost of around Rs. 2,000 crore.
    • The tunnel will have a two-lane carriageway and will be constructed using the latest tunnelling technology.
    • The project is being executed by the National Highways and Infrastructure Development Corporation Limited (NHIDCL).

    Significance

    • The tunnel is expected to provide all-weather connectivity to the Kashmir Valley, which is currently cut off from the rest of India for several months during the winter season due to heavy snowfall and avalanches.
    • The tunnel will also reduce the travel time between Srinagar and Leh by around four hours, as it will eliminate the need to cross the Zoji-Morh pass.

     

  • Digital Public Infrastructure (DPI): New Backbone of India’s Economy

    DPI

    Central Idea

    • India’s digital public infrastructure (DPI) is a unique marvel of our times that has brought together the government, regulators, private sector, volunteers, startups, and academia to create a superstructure that delivers consistent, affordable, and across-the-board value to citizens, government, and corporate sector alike.

    What is India’s digital public infrastructure (DPI)

    • India’s digital public infrastructure (DPI) refers to the collection of technological systems, platforms, and services that enable the Indian government, businesses, and citizens to interact digitally.
    • The DPI is often referred to as the India Stack, which was built through a unique partnership between the government, regulators, the private sector, selfless volunteers, startups, and academia/think tanks.
    • India Stack includes a number of building blocks such as Aadhaar (a biometric identification system), e-KYC (electronic know your customer), UPI (Unified Payments Interface), and DigiLocker (a cloud-based document storage system).

    DPI

    DPI in India

    • India, first country to develop all three foundational DPIs: India through India Stack became the first country to develop all three foundational DPIs digital identity (Aadhar), real-time fast payment (UPI) and a platform to safely share personal data without compromising privacy (Account Aggregator built on the Data Empowerment Protection Architecture or DEPA)
    • Techno-legal regulatory frameworks in India: Techno-legal regulatory frameworks are used to achieve policy objectives through public-technology design.
    • For example: India’s DEPA offers technological tools for people to invoke the rights made available to them under applicable privacy laws. Framed differently, this techno-legal governance regime embeds data protection principles into a public-technology stack.
    • DPI most feasible model: DPI has emerged as the most feasible model due to its low cost, interoperability and scalable design, and because of its safeguards against monopolies and digital colonisation.

    Aadhaar and the private sector

    • Rebirth of Aadhaar: Prime Minister Narendra Modi’s vision enabled Aadhaar to become the rocket ship for launching good governance in India. Currently, over 1,700 Union and State government schemes use Aadhaar.
    • Aadhaar and the private sector: After the Supreme Court’s affirmation of privacy rights, Aadhaar is gradually being opened to the private sector. Aadhaar holders can voluntarily use their Aadhaar for private sector purposes, and regulated entities can store Aadhaar numbers using secure vaults. These changes are leading to the next leapfrogging of India Stack.
    • Three changes: The next leapfrogging of the India Stack, with a dynamic political executive and inspired volunteers, will happen with three changes, voluntary usage of Aadhaar for private sector purposes, sharing of Aadhaar data between government departments, and the creation of a new private sector-friendly UIDAI.

    DigiYatra and DigiLocker

    • India Stack’s greenfield market innovation potential can unlock various services such as DigiYatra, which offers a free biometric-enabled seamless travel experience through facial recognition systems, and DigiLocker, which has 150 million users and six billion stored documents.
    • Plans are afoot to expand DigiLocker to many countries around the world.

    Facts for prelims

    Initiative Description Launched by
    DigiLocker Cloud-based document storage platform for citizens Ministry of Electronics and Information Technology
    DigiYatra Digital travel experience initiative for air travellers Ministry of Civil Aviation
    DigiSeva Digital service delivery platform for government services Ministry of Electronics and Information Technology
    DigiGaon Digital village initiative to provide digital infrastructure Ministry of Electronics and Information Technology
    DigiShala Digital classroom initiative to promote digital education Ministry of Human Resource Development
    DigiPay Digital payments platform for government services National Payments Corporation of India
    DigiSaksham Digital literacy initiative to empower citizens Ministry of Electronics and Information Technology
    DigiDhan Digital payments and financial inclusion initiative Ministry of Electronics and Information Technology
    DigiSangrah Digital repository of cultural resources for citizens Ministry of Culture
    DigiMuseums Digital initiative to showcase Indian museums online Ministry of Culture

    Impact of unified payment interface (UPI)

    • The unified payment interface UPI which is breaking records under the visionary leadership at the National Payments Corporation of India
    • UPI has now crossed eight billion transactions per month and transacts a value of $180 billion a month, or about a staggering 65% of India’s GDP per annum.

    DPI

    Conclusion

    • India’s Digital Public Infrastructure (DPI) can be seen as India’s second war for independence, this time for economic freedom from the daily struggles of transactions and bureaucracy. DPI has emerged as the new backbone of India’s economy, propelling it towards the goal of achieving a $25 trillion economy by the 100th year of India’s political independence. With the convergence of ChatGPT and India Stack, we can only imagine the tremendous progress and innovations that could spark a new era of economic growth and development, much like the Cambrian explosion in evolutionary history.

    Mains question

    Q. What is India’s digital public infrastructure (DPI)? Explain the building blocks of the India Stack and their significance.

  • Gravity-Operated Electricity Generation from Defunct Mines

    gravity

    Central idea: Green Gravity is an Australian renewable energy company that has developed a unique scheme to generate electricity. The company’s plan involves using defunct mines, such as the Kolar Gold Fields (KGF) in Karnataka, India, to produce reliable and cost-effective renewable energy.

    The breakthrough: Gravity-Operated Weighted Blocks

    • It uses a weighted block of up to 40 tonnes up to the top of a mine shaft using renewable power during the day when it is available.
    • When backup power is required, the heavy block will fall under gravity, powering a generator via a connected shaft or rotor.
    • The depth to which the block falls can be determined via a braking system, giving control over the amount of power produced.

    Comparison to Pumped Hydropower Storage

    • Green Gravity’s approach is similar to the well-established approach of “pumped hydropower” storage.
    • In this approach, water is pumped upstream electrically into a reservoir and released downhill to move a turbine and produce electricity when needed.

    Need for such technology

    • Renewable energy, such as solar and wind power, often faces the challenge of being unreliable during nights or windless days.
    • Charging a battery for backup power is very expensive and inefficient.

    Advantages of Weighted Blocks over Water

    • Using weighted blocks instead of water means that decommissioned mines can be put to use, and the environmental costs and challenges of moving water up can be avoided.
    • This approach can also mean less reliance on coal-produced power and access to reliable power.

    Potential Use in KGF

    • The Kolar Gold Fields in Karnataka, India, is an iconic but defunct gold mine that has the potential to be used for renewable energy production.
    • The weighted block apparatus could produce up to thousands of megawatt-hours of power from the mine’s deep shafts, some of which run nearly 3,000 metres.

     

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  • Prices of Essential Medicines set to hike

    medicine

    Prices of 384 essential drugs and over 1,000 formulations are set to see a hike of over 11%, due to a sharp rise in the Wholesale Price Index (WPI).

    Implications for customers

    • Annual hikes in the prices of drugs listed in the National List of Essential Medicines (NLEM) are based on the WPI.
    • The price surge will mean that consumers have to pay more for routine and essential drugs, including painkillers, anti-infection drugs, cardiac drugs, and antibiotics.

    What are Essential Medicines?

    • As per the World Health Organisation (WHO), Essential Medicines are those that satisfy the priority healthcare needs of the population.
    • Ministry of Health and Family Welfare hence prepared and released the first National List of Essential Medicines (NLEM) of India in 1996 consisting of 279 medicines.
    • The list is made with consideration to disease prevalence, efficacy, safety and comparative cost-effectiveness of the medicines.
    • Such medicines are intended to be available in adequate amounts, in appropriate dosage forms and strengths with assured quality.
    • They should be available in such a way that an individual or community can afford.

    NLEM in India

    • Drugs listed under NLEM — also known as scheduled drugs — will be cheaper because the National Pharmaceutical Pricing Authority (NPPA) caps medicine prices and changes only based on wholesale price index-based inflation.
    • The list includes anti-infectives medicines to treat diabetes such as insulin — HIV, tuberculosis, cancer, contraceptives, hormonal medicines and anaesthetics.
    • They account for 17-18 per cent of the estimated Rs 1.6-trillion domestic pharmaceutical market.
    • Companies selling non-scheduled drugs can hike prices by up to 10 per cent every year.
    • Typically, once NLEM is released, the department of pharmaceuticals under the ministry of chemicals and fertilisers adds them in the Drug Price Control Order, after which NPPA fixes the price.

    Who regulates Drugs prices?

    • The NPPA was set up in 1997 to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013.
    • Its mandate is:
    1. To implement and enforce the provisions of the DPCO in accordance with the powers delegated to it
    2. To deal with all legal matters arising out of the decisions of the NPPA
    3. To monitor the availability of drugs, identify shortages and to take remedial steps
    • The NPPA is also mandated to collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies etc., for bulk drugs and formulations and undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.

    How does the pricing mechanism work?

    • Prices of Scheduled Drugs are allowed an increase each year by the drug regulator in line with the Wholesale Price Index (WPI) and the annual change is controlled and rarely crosses 5%.
    • But the pharmaceutical players pointed out that over the past few years, input costs have flared up.
    • The hike has been a long-standing demand by the pharma industry lobby.
    • All medicines under the NLEM are under price regulation.

     

    Try this MCQ

    Q. Which of the following is not a mandate of the National Pharmaceutical Pricing Authority (NPPA)?

    A) Fixing and revising prices of controlled bulk drugs and formulations

    B) Enforcing price and availability of medicines in the country

    C) Monitoring the availability of drugs and taking remedial steps

    D) Regulating the import and export of pharmaceutical products

     

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  • Scrapping Tax Benefit for Debt Mutual Funds: Analysis

    Central Idea

    • The Finance Bill 2023, passed by the Lok Sabha with 64 amendments, includes the controversial decision to remove the tax benefit for debt mutual funds. While the aim is to remove the advantage of debt funds over bank deposits, this decision will have far-reaching consequences that need to be examined.

    Mutual Funds

    • Investment decisions on behalf of the investors: Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. Mutual funds are managed by professional fund managers who make investment decisions on behalf of the investors in the fund.
    • Diversified portfolio of securities: Investors in a mutual fund own a proportional share of the fund’s underlying assets, and the value of their investment rises or falls in response to changes in the value of the securities held by the fund. Mutual funds can provide investors with access to a diversified portfolio of securities, which can help to mitigate the risk of investing in individual securities.

    Key differences between Mutual funds and debt mutual funds

    • Mutual funds and debt mutual funds are both types of investment funds, but there are some key differences between them
    Comparison Mutual Funds Debt Mutual Funds
    Types of Investments Stocks, bonds, commodities, and other asset classes Fixed-income securities such as bonds, debentures, treasury bills, and commercial papers
    Risk Generally higher risk due to the inclusion of stocks and other volatile assets Generally lower risk due to the focus on fixed-income securities
    Returns Potentially higher returns over the long term, but subject to more volatility Lower returns compared to equity mutual funds, but also come with lower risk
    Investment Objective Can vary widely depending on the type of fund Provide regular income to investors while preserving capital
    Liquidity Can be less liquid than debt mutual funds due to volatility in underlying securities Generally considered more liquid due to less volatility in underlying securities

    The Debate Over Scrapping Tax Benefit for Debt Mutual Funds

    • Removal of the tax benefit for debt mutual funds: The Finance Bill 2023 passed by voice vote in the Lok Sabha last week with 64 amendments, including the removal of the tax benefit for debt mutual funds.
    • What it means: This change means that investors in debt mutual funds cannot avail the benefit of indexation for the calculation of long-term capital gains. From April 1, such investments will now be taxed at income tax rates applicable to an individual’s tax slab.
    • Motive: This move aims to remove the advantage that such debt funds have over bank deposits. However, the consequences of this decision need to be carefully examined.

    The Impact of Removing Tax Benefit

    • Impact on flow of funds: The removal of the tax benefit will lead to investors reassessing their allocations to debt mutual funds, which may impact flows into these funds.
    • Impact on bond market: This, in turn, may impact the growth and development of the bond market in India since debt mutual funds channel funds into the bond market.
    • For instance: According to a report by Crisil, 70% of the investment in debt funds flows from institutional investors, while individual investors, including high net worth individuals, accounted for 27% as of December 2022.
    • Impact on corporate debt: This change in rule may trigger a shift in investments away from debt mutual funds to other instruments, which will possibly affect flows to the corporate bond market, and demand for corporate debt is likely to be impacted.

    The Need for Rationalization

    • There is a need to acknowledge the finer points of differentiation between bank deposits and debt funds since bank deposits are insured up to Rs 5 lakh while debt mutual funds carry risk depending on the risk profile of the bonds they hold.
    • It has been argued that the capital gains architecture in India needs to be reexamined and reconfigured.
    • Not only are there different rates of taxation for different asset classes, but even the holding period for differentiating between short- and long-term capital gains varies across assets. Thus, rationalisation with regard to the tax rate and/or the holding period is desirable.

    Conclusion

    • While the removal of the tax benefit for debt mutual funds may remove the advantage of such funds over bank deposits, its far-reaching consequences need to be carefully examined. There is a need to acknowledge the finer points of differentiation between bank deposits and debt funds, as well as rationalisation of the tax architecture in India. Therefore, there is a need for broader discussions and debates on these issues.
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  • Blue Economy: India’s G20 Presidency Offers An Opportunity

    Blue Economy

    Central Idea

    • The potential of the oceans for the sustainable development of the blue economy is immense and the initiatives taken by the Government of India towards achieving it demonstrate India’s commitment to building a sustainable future for its marine resources and the global community. India’s G20 presidency provides an opportunity to promote collective action for the transition.

    What is Blue Economy?

    • Blue Economy is defined by the World Bank as the Sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of the ecosystem.
    • Gunter Pauli’s book, “The Blue Economy: 10 years, 100 innovations, 100 million jobs” (2010) brought the Blue Economy concept into prominence.
    • The UN first introduced “blue economy” at a conference in 2012 and underlined sustainable management, based on the argument that marine ecosystems are more productive when they are healthy. In fact, the UN notes that the Blue Economy is exactly what is needed to implement SDG 14, Life Below Water.
    • The term ‘blue economy’ includes not only ocean-dependent economic development but also inclusive social development and environmental and ecological security.

    The Potential of the Oceans

    • The oceans offer vast opportunities for the prosperity of our planet, with 45% of the world’s coastlines and over 21% of the exclusive economic zones located in G20 countries.
    • They are reservoirs of global biodiversity, critical regulators of the global weather and climate, and support the economic well-being of billions of people in coastal areas.

    Facts for prelims: Government Initiatives

    • The Government of India has launched several initiatives to promote the development of a blue economy, such as
    Initiative Description
    Sagarmala initiative A program launched in 2015 to promote port-led development and boost the country’s maritime sector. It aims to modernize ports, improve connectivity and logistics, and promote coastal community development.
    Shipbuilding Financial Assistance Policy A policy introduced in 2016 to provide financial assistance to Indian shipyards for the construction of ships. It aims to boost domestic shipbuilding and make Indian shipyards globally competitive.
    Pradhan Mantri Matsya Sampada Yojana A scheme launched in 2020 to boost the fisheries sector in India. It aims to increase fish production, modernize fishing infrastructure, and create employment opportunities in the sector.
    Sagar Manthan dashboard An online dashboard launched in 2018 to track the progress of the Sagarmala initiative. It provides real-time information on project implementation, fund utilization, and other related metrics.
    Deep Ocean Mission A program launched in 2021 to explore the deep sea and harness its resources for national benefit. It aims to explore the deep sea, map its resources, develop technologies for deep-sea mining, and promote ocean conservation.
    Coastal Regulation Zone notification A regulation introduced in 2019 to manage development activities along India’s coastline. It aims to balance the economic development of coastal areas with the conservation of coastal ecosystems and livelihoods of coastal communities.
    • The government has also taken steps to eliminate single-use plastic and combat plastic pollution, including in the marine environment.

    India’s G20 Presidency and the Blue Economy

    • Key priority: India’s G20 presidency has prioritized the blue economy as a key area under the Environment and Climate Sustainability Working Group.
    • Promote sustainable and equitable development: The aim is to promote the adoption of high-level principles for sustainable and equitable economic development through the ocean and its resources while addressing climate change and other environmental challenges.
    • A guide for future G20 presidencies: India’s commitment to prioritizing oceans and the blue economy under its presidency would ensure continued discussions on this crucial subject and pave the way for future G20 presidencies.
    • Communication and collaboration: Effective and efficient ocean and blue economy governance presents a significant challenge, and India’s G20 presidency can build an effective communication with all stakeholders to share best practices, foster collaborations for advancements in science and technology, promote public-private partnerships, and create novel blue finance mechanisms.

    Challenges and Responsibility

    • Ambitious efforts by countries to expand their blue economies are threatened by intensifying extreme weather events, ocean acidification, and sea-level rise.
    • Marine pollution, over-extraction of resources, and unplanned urbanization also pose significant threats to the ocean, coastal and marine ecosystems, and biodiversity.
    • The inherent inter-connectedness of oceans implies that activities occurring in one part of the world could have ripple effects across the globe.
    • Therefore, the responsibility of their protection, conservation, and sustainable utilization lies with all nations.

    Conclusion

    • India’s G20 presidency offers an opportunity to promote individual and collective actions towards a sustainable blue economy. The stewardship of oceans is an investment that will sustain future generations, and the global community must unite for the well-being of our ocean commons.
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  • What is Patent Evergreening?

    patent

    Central idea: Patent Evergreening

    • Indian Patent Office rejects Johnson & Johnson’s attempt to extend monopoly on manufacturing Bedaquiline in India beyond July 2023.
    • This is a victory for patients fighting for wider access to crucial anti-tuberculosis drug Bedaquiline.
    • Expired primary patents pave the way for generic drug manufacturers to produce Bedaquiline, thus ensuring cheaper and wider access to the drug.

    Significance of the move

    • The drug has been shown to have a high success rate in treating MDR-TB, and is considered to be a significant breakthrough in the fight against this disease.
    • However, the high cost of the drug has made it difficult for many patients to access it, particularly in developing countries.

    What is Bedaquiline?

    • Bedaquiline is a drug that is primarily used in the treatment of multidrug-resistant tuberculosis (MDR-TB).
    • MDR-TB is a serious public health threat, particularly in countries with high TB burdens, as treatment options for this condition are limited and often ineffective.
    • It was developed by Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson. Bedaquiline.
    • It is an antibiotic that works by inhibiting ATP synthase, which is a key enzyme involved in the energy production of TB bacteria.
    • Bedaquiline is typically administered in combination with other drugs for a period of six months.

     

    Implications

    • India and the US has often been at the crossheads due to Section 3(d) of Patents Act that allows for “generic competition by patenting only novel and genuine inventions.”
    • US always accuses India as one of the most challenging major economies as far as IP protection and enforcement is concerned.

    Indian Patent Regime: A Backgrounder

    • Indian patents are governed by the Indian Patent Act of 1970.
    • India has gradually aligned itself with international regimes pertaining to intellectual property rights.
    • It became a party to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement following its membership to the World Trade Organisation on January 1, 1995.
    • The interesting point is that the original Indian Patents Act did not grant patent protection to pharmaceutical products to ensure that medicines were available at a low price.
    • Patent protection of pharmaceuticals was re-introduced after the 2005 amendment to comply with TRIPS.

    What is Patents Evergreening?

    • One of the main points of contention between India and the US has been Article 3(d) of the Indian Patent Act.
    • Section 3 deals with what does not qualifyas an invention under the Act, and Section 3(d) in particular excludes the mere discovery of a new form of a known substance.
    • Section 3(d) prevents the mere discovery of any new property or new use for a known substance from being patented as an invention unless it enhances the efficacy of the substance repetitive.
    • This prevents, what is known as “Evergreening” of patents.
    • According to the Committee’s report, Section 3(d) allows for “generic competition by patenting only novel and genuine inventions.”

    Conclusion

    • The gravity of public health problems affecting developing and least developed nations must be recognized by developed nations such as the US.
    • Though intellectual property protection is important for the development of new medicines but the right to protect public health and, in particular, to promote access to medicines for all is far more important.
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  • Explained: Interest Rate Risks

    interest

    Central idea: Finance Minister urged banks to remain vigilant about “interest rate risks” and undertake regular stress tests during a review of public sector banks’ (PSBs) performance on March 25.

    Why in news?

    • Inflation-led rising interest rates across the world have caused concerns of contagion effects from banking crises in the US and Europe.

    What is Interest Rate Risk?

    • Interest rate risk refers to the possibility that a loss could happen as a result of a fluctuation in interest rates.
    • A bond’s or another fixed-income security’s value will decrease if the rate rises.
    • Interest rate movement typically has an inverse relationship with the market value of fixed-income assets.
    • In general, the values of currently issued fixed income instruments decrease when interest rates rise and rise when interest rates decrease.

    How does it affect banks?

    Interest rate risk affects banks in several ways-

    1. Interest yields: Banks earn interest income by lending out funds to borrowers at a higher rate than the cost of borrowing those funds. When interest rates rise, the cost of borrowing funds for banks increases, thereby decreasing their net interest margins (NIMs) and profitability.
    2. Bond yield: Banks also hold a large amount of fixed-income securities in their portfolios, such as government bonds, corporate bonds, and mortgage-backed securities. These securities generate a fixed interest income, which can be affected by changes in interest rates. When interest rates rise, the value of fixed-income securities held by banks decreases, leading to a potential loss in the value of their investment portfolio.
    3. Liabilities burden: Banks’ liabilities, such as deposits, often have short maturities, while their assets, such as loans, have longer maturities. When interest rates rise, the cost of funding short-term liabilities increases, while the interest earned on longer-term assets remains fixed. This can negatively impact banks’ profitability and cash flows.

    Why do banks resort to interest rate increases?

    Banks resort to interest rate increases for several reasons-

    • Combat inflation: When the economy experiences a rapid increase in prices, the central bank may raise interest rates to discourage borrowing and spending, thereby cooling down the economy and reducing inflationary pressures.
    • Attract deposits: Banks may raise interest rates to attract more deposits from savers, which in turn allows them to lend more money and earn more profits.
    • Protection against risks: banks may also raise interest rates in response to changes in the global financial market or to protect their own financial stability in the face of potential risks or shocks.

     

    Try this MCQ:

    Which of the following best describes interest rate risk in banking?

    (a) The potential loss of income due to changes in interest rates

    (b) The risk that borrowers will default on their loans due to high-interest rates

    (c) The risk that banks will become insolvent due to low-interest rates

    (d) The potential loss of value of a bank’s assets due to changes in interest rates

     

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  • Lok Sabha clears forming GST Appellate Tribunal

    The Lok Sabha passed Finance Bill, 2023 with some amendments, including one that seeks to set up the much-awaited GST Appellate Tribunal (GSTAT), which will deal with tax disputes.

    What is GST Appellate Tribunal?

    • The GST Appellate Tribunal is a quasi-judicial body proposed to be established to resolve disputes related to the Goods and Services Tax (GST) in India.
    • It will function as an independent body to hear appeals against orders passed by the GST authorities or the Appellate Authority.
    • The tribunal will be composed of a national bench and various regional benches, headed by a chairperson appointed by the central government.
    • The proposed tribunal is expected to help expedite the resolution of disputes related to GST and reduce the burden on the judiciary.

    Under GST, if a person is not satisfied with the decision passed by any lower court, an appeal can be raised to a higher court, the hierarchy for the same is as follows (from low to high):

    1. Adjudicating Authority
    2. Appellate Authority
    3. Appellate Tribunal
    4. High Court
    5. Supreme Court

    Composition of GSTAT

    • GSTAT will have a “Principal Bench” in New Delhi.
    • It would have the President (probably a former Supreme Court judge), a judicial member, a technical member (centre), and a technical member (state).
    • It will also have state benches.
    • Appeals pertaining to disputes of less than Rs. 50 lakh that don’t deal with a question of law could be decided by a single-member bench, as per the norms approved by the GST Council.

    Why need such Tribunal?

    • Unburden judiciary: GST Appellate Tribunal will help resolve the rising number of disputes under the 68-month old indirect tax regime that are now clogging High Courts and other judicial fora.
    • Improve the efficiency of GST System: Overall, the establishment of the GST Appellate Tribunal is expected to improve the efficiency and effectiveness of the GST system in India.
    • Independent mechanism: The proposed Tribunal will provide an independent and efficient mechanism for resolving disputes related to GST.
    • Avoid tax evasion: It will help to expedite the resolution of disputes, reduce the burden on the judiciary, and promote greater certainty and predictability in the GST system.

    Issues with present litigation

    • Compliance issues: The GST system is relatively new in India, having been implemented in 2017, and there have been several issues with compliance and interpretation of rules and regulations.
    • Complex adjudication hierarchy: The current dispute resolution mechanism involves multiple layers of adjudication, starting with the GST officer and as mentioned above.
    • Time-consuming process: This process can be time-consuming, costly, and burdensome for taxpayers, especially small and medium-sized enterprises.

    Back2Basics: Finance Bill

    • A Finance Bill is a proposed legislation that is introduced by the government to implement the financial proposals of the Union Budget for the upcoming financial year in India.
    • It is a comprehensive document that outlines the government’s revenue and expenditure for the year, including changes in tax laws, tariffs, customs duties, and other fiscal measures.
    • Since the Union Budget deals with these things, it is passed as a Finance Bill.

    Types of Finance Bills

    • There are different kinds of Finance Bills — the most important of them is the Money Bill. The Money Bill is concretely defined in Article 110.
    • In India, there are three types of Finance Bills that can be introduced in the Parliament:
    1. Annual Finance Bill: This is the most common type of Finance Bill and is introduced by the government every year to give effect to the tax proposals announced in the Union Budget. It contains provisions related to taxation, expenditure, and revenue collection for the upcoming financial year.
    2. Finance Bill (Money Bill): A Money Bill is a type of Finance Bill that contains only provisions related to taxation and expenditure, but does not include any other matter. Money Bills are deemed to be passed by the Lok Sabha, the lower house of Parliament, and do not require approval from the Rajya Sabha, the upper house of Parliament.
    3. Finance Bill (Non-Money Bill): This type of Finance Bill contains provisions related to taxation and other matters, such as changes in the structure of regulatory bodies or the introduction of new policies. Unlike Money Bills, Non-Money Bills must be passed by both the Lok Sabha and the Rajya Sabha to become law.

    How is money bill different from Finance Bill?

    • A Money Bill is certified by the Speaker as such — in other words, only those Financial Bills that carry the Speaker’s certification are Money Bills.
    • Article 110 states that a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters:

    (a) the imposition, abolition, remission, alteration or regulation of any tax;

    (b) the regulation of the borrowing of money or any financial obligations undertaken

    (c) the custody of the consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;

    (d) the appropriation of moneys out of the consolidated Fund of India;

    (e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;

    (f) the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or

    (g) any matter incidental to any of the matters specified in sub clause (a) to (f)

     

     

     

  • In news: Liberalised Remittance Scheme (LRS)

    Central idea: The Reserve Bank of India (RBI) is being asked to monitor card spend under the Liberalised Remittance Scheme (LRS).

    Liberalised Remittance Scheme (LRS)

    • LRS is a facility provided by the Reserve Bank of India (RBI) to resident individuals to remit funds abroad for permitted current or capital account transactions or a combination of both.
    • The scheme was introduced in 2004 and has been periodically reviewed and revised by the RBI.
    • Under the scheme, resident individuals can remit up to a certain amount in a financial year for permissible transactions including education, travel, medical treatment, gifts, and investments in equity and debt securities, among others.
    • The limit for LRS is currently set at USD 250,000 per financial year.

    Eligibility for LRS

    • LRS is open to everyone including non-residents, NRIs, persons of Indian origin (PIOs), foreign citizens with PIO status and foreign nationals of Indian origin.
    • The Scheme is NOT available to corporations, partnership firms, Hindu Undivided Family (HUF), Trusts etc.

    Benefits provided by LRS

    • LRS is an easy process that anyone can use to transfer money between two countries.
    • It’s especially useful for businesses because they can use it to transfer funds to India, and investors can receive their investments back home.
    • LRS also has some added benefits, like fast transfer timing and no issues with exchange rates.