Note4Students
From UPSC perspective, the following things are important :
Prelims level: Constituent assembly
Mains level: Paper 2- Decline in the functioning of legislature
Context
This 75th year of India’s Independence feels like what its first year of freedom may have been like. The pandemic era defined by large-scale loss, lack of adequate state infrastructure and deep economic uncertainty — on the face of it — is reminiscent of the Partition years.
Declining role of Parliament
1) Low functioning
- In 2020, Parliament sat in session for 33 days.
- According to PRS Legislative Research (PRS), in the 2021 Monsoon Session, the Lok Sabha was scheduled to work for six hours per day for 19 days.
- Instead, it sat for 21 hours in total or 21 per cent of what was conceived.
- Brazil’s Parliament used an application called Infoleg during the pandemic and functioned at higher rates than in pre-pandemic times.
- The United States Congress met physically for 113 days in 2020. In the year before, they met for 130 days.
- In the past 10 years, the Rajya Sabha has functioned for less than 25 per cent of its scheduled time.
2) Neglect of the role of Parliamentary Committees
- According to PRS, none of the 15 bills introduced in this Monsoon Session 2021 has been referred to a Parliamentary Committee.
- In this current Lok Sabha commencing 2019, only 12 per cent of the bills introduced have been referred to committee.
- By contrast, the 16th Lok Sabha (2014-2019) had 27 per cent and the 15th Lok Sabha (2009-2014) had 71 per cent of bills referred to standing committees.
- More significantly, fewer and fewer drafts of key legislation are being debated across the political aisle before becoming law.
3) No discussion of supplementary budget
- In this Lok Sabha, nine minutes were spent discussing and passing the supplementary budget that included a Rs 15,750 crore Covid-19 Emergency Response and Health System Preparedness Package.
- This is the functioning of the legislature — increasingly convened less and debates are few.
Contrast with functioning of Parliament when country faced partition
- The drafting of India’s Constitution started in December 1946, when the Constituent Assembly first met, seven months before Independence in August 1947.
- What makes these years of our constitutional founding so dramatic, was that the backdrop to our founding was as torturous as this pandemic era.
- As Delhi was slowly filling up with refugees, India’s dual function legislature functioned as Parliament by morning and Constituent Assembly in the afternoon.
- The first Constituent Assembly was meant to comprise 296 members, but its initial session had only 210 members in attendance.
- The assembly faced a boycott by the rest of the members.
- The Constituent Assembly caucus of the founding Congress Party included many members from outside the party.
- These members from across the political-ideological spectrum were able to arrive at decisions using a mixture of techniques of problem-solving, persuasion, bargaining and politicking.
Conclusion
The functioning of the Partition era Constituent Assembly is held up as a model of nation-building. Our political class today needs to learn from the makers of our Constitution and stop the declining role of our Parliament today.
UPSC 2022 countdown has begun! Get your personal guidance plan now!
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: e-RUPI
Mains level: Paper 3- e-RUPI and its advantages
Context
Recently e-RUPI was launched by the Prime Minister.
About e-RUPI
- It is a digital prepaid, purpose, and person-specific payment utility.
- Built on the UPI platform, e-RUPI is easy to scale by the issuer.
- At the point of presence, the verification code received by the beneficiary is shared with the service provider to authenticate and authorize the transaction: Contactless, real-time payment, and online settlement of funds into the service provider’s bank account.
- Fourteen leading banks have already integrated it with their systems.
- e-RUPI is almost custom-designed for school voucher programs.
- The efficacy of these programs is well established in many countries.
Advantages
The adoption of e-RUPI in various government programs will enhance business efficiency, simplicity, transparency, and accountability in these programs.
1) e-RUPI can make cash transfer purpose and person-specific
- Policymakers have debated whether direct cash transfers deliver benefits more efficiently than in-kind transfers like the Public Distribution System (PDS) and fertilizers.
- e-RUPI could break the policy logjam with the following advantages:
- 1) It will make cash transfers purpose- and person-specific.
- 2) Freeing them from dependence on bank accounts.
- 3) Providing visibility from the time of issue until redemption.
2) e-RUPI can make PDS more efficient
- The inefficiency of PDS is rooted in high overhead costs, leakages, exclusion, and inefficiencies.
- A food-specific e-RUPI voucher will allow beneficiaries to buy rations from an outlet of their choice.
- It will also help promote the One Nation, One Ration Card.
- The move will also help in removing price distortion and the redemption of the voucher at market price by merchants within and outside the PDS network.
3) Streamline fertilizer subsidy
- e-RUPI will enable farmers to buy fertilizer at nominal prices with direct credit of the subsidy amount into the account of the authorised dealers.
- As far back as 2011, a task force on direct transfer of subsidies on kerosene, LPG and fertilisers headed by Nandan Nilekani had suggested a roadmap for direct cash transfer of fertiliser subsidies in a phased manner.
- The e-RUPI will allay apprehensions about creating an IT infrastructure, managing nearly 3,00,000 fertilizer sale points, the collapse of dealer network due to liquidity squeeze in the event of subsidy payments getting delayed, and a complex system of timely credit of subsidy into an estimated 129 million Aadhaar-linked bank accounts of farm households.
4) Basic income support
- The Covid-19 pandemic has revived interest in Universal Basic Income (UBI).
- The lockdowns to contain the pandemic exposed the poor to acute distress, due to loss of means of livelihood.
- e-RUPI can mitigate their stress by rapidly distributing food and cash vouchers at scale.
5) Ayushman Bharat
- In the Ayushman Bharat healthcare initiative beneficiaries can be given e-RUPI vouchers of designated value tenable at empanelled healthcare facilities, providing them portability and facility choice.
- The service provider will benefit from the immediate payment.
Way forward
- Ownership agency: The Aadhaar experience suggests ownership must vest with a specific agency.
- Make distribution and acceptance compatible: Making the distribution and acceptance of e-RUPI incentive-compatible is recommended, as demonstrated by the popularisation of prepaid telephony by the telecom industry.
- Light regulation and competition promotion: Light regulation and the opening of e-RUPI to the competition will spur innovation and adoption.
- All banks, small and big, NBFCs, non-bank PPI issuers, and telcos may be allowed to issue it later.
Conclusion
e-RUPI opens up a world of opportunities to the government, people, and businesses to provide, avail, and pay for services seamlessly.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Quad
Mains level: Paper 2- India-China relations
Context
Chinese President Xi Jinping made a surprise visit to Tibet on July 21, signalling the seriousness with which China continues to take its Himalayan border dispute with India.
Understanding China’s strategic challenges and intensions
- Demonstration of political confidence through aggression: More than a year after the clash at Galwan Valley, efforts to resolve the border crisis continue to move slowly.
- The Chinese side has previously failed to complete troop withdrawals and revert to the status quo that the Indian side believed China agreed to.
- China’s behaviour has been calculated to demonstrate political confidence.
- Worsening strategic environment for China: Seen from Beijing, the strategic environment for China is beginning to worsen in South and Central Asia.
- As the US withdraws and the Taliban advances in Afghanistan, China fears the prospect of instability and an emerging haven for terrorism directed against its policies in Xinjiang.
- Even as China seeks to scale back the debt-laden BRI, such instability may also result in Beijing increasing its already overstretched external commitments — particularly in the security domain.
- Re-emergence of Quad: China is deeply worried by the re-emergence and strengthening of multilateral opposition to China, and the Quadrilateral Security Dialogue (or “Quad”) between the US, Japan, Australia and India.
- For China, this represents a persistent threat not only economically and in foreign policy, but also militarily along its maritime periphery in the South and East China Seas, as well as the Taiwan Strait.
- As US multilateral cooperation with its partners has increased, Beijing has come to increasingly see itself as beset by threats on all sides.
China’s 2 possible responses to strategic challenges and its implications for India
- 1) Wolf warrier diplomacy: So far, the response from China’s new class of “wolf warrior” diplomats to this emerging strategic challenge has been to only grow more assertive in rhetoric and behaviour.
- China’s domestic politics: Response of wolf warrior diplomats may seem perplexing, given that it has served only to alienate other countries and isolate China further.
- China’s domestic politics in the lead up to the 20th Congress will mean that its leaders, diplomats and generals will be displaying maximum nationalistic fervour.
- Implications for India: This may well mean China taking political and policy decisions, which in a normal season they would not because doing so could compromise Beijing’s longstanding diplomatic and strategic goals, including in dealings with India.
- 2) Moderate approach to improve strategic position: But if instead of aggressive posture, China decided that it was better domestic politics to improve China’s strategic position in Asia amid its competition with Washington, Beijing’s diplomats may yet adopt a more moderate approach, including with India.
- Implications for India: If stability can be restored to the China-India strategic relationship, this could provide a window for Asia’s two mega-economies to reopen their markets to each other.
Conclusion
Indeed, the choice China makes between these two alternatives will have implications for India and the rest of the world in their dealing with China.
Feeling anxious about your UPSC preparation? Don’t worry, speak with our mentors and get your problems resolved, personally! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: UDAY
Mains level: Paper 3- Schemes for discoms and issues with them
Context
A recent report of Niti Aayog has assessed the losses of discoms to be about Rs 90,000 crore in 2020-21.
Central government schemes for discoms
- In 2001, the Accelerated Power Development Scheme was initiated.
- This was followed by various other schemes with some differences between them.
- The government had launched the UDAY scheme in 2015.
- UDAY did not involve any monetary assistance to the states, but only promised to help the states in reducing the cost of power through coal linkage rationalization, etc.
- Recently, the government launched a new scheme with a total outlay of around Rs 3.03 lakh crore.
- It seeks to improve the distribution infrastructure of the distribution companies (discoms) with the primary intention of improving their financial health.
- The objective of the scheme is to bring down commercial losses in the range of 12-15 percent and also reduce the difference between the average cost of supply (ACS) and average revenue realized (ARR) to zero by 2024-25.
- The problem with all these schemes (including UDAY) is that they have not been delivered and the financial position of the discoms has only worsened.
Why did schemes fail to improve the financial health of discoms?
- Reduction of loss is a managerial issue: Reduction of commercial losses is not really about improving infrastructure, it is more of a managerial issue.
- The average loss (inclusive of technical and commercial) is about 22 percent today.
- But several discoms have losses in excess of 40 percent.
- It is possible to bring down losses from 40 percent to about 15 percent without any significant investments in infrastructure.
- Investments, however, would be required to bring down losses further to a single-digit level.
- The governance issues of the scheme is a complex issue.
- The two most popular parameters which are monitored are the loss levels and the difference between the ACS and ARR.
- There are inherent problems with these parameters since they keep fluctuating and it is very difficult to fathom their trend on a quarter-wise basis, rendering the release of funds to be tricky and cumbersome.
- In the scheme now announced by the government, about 26 parameters will be taken into consideration and assigned a score.
- For some of the parameters, it may be difficult to assign a score across discoms which may lead to some amount of subjectivity.
Way forward: Alternate approach
- Provide transitional financial support: An alternate approach that could be considered by the Centre (in lieu of such assistance schemes) is providing only transitional financial support to all discoms, which are privatized under the private-public partnership mode.
- A transitional support of Rs 3,450 crore spread over five years proved to be exceedingly beneficial in the case of discoms in Delhi.
- Promote privatization: Since in an earlier policy statement the government had mentioned that privatization of discoms is to be promoted, it would make sense to consider this transitional support as a catalyst.
Conclusion
Adopting this approach will ensure that the central government moves away from the micro-management of discoms, which inevitably happens if the release of funds is linked to reform-linked parameters on a quarter-wise basis.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 124(2) and Article 217
Mains level: Issues with collegium system
Context
Recommendations of some judges for appointment by the collegium raises the issue of changes in the collegium system.
Background of the collegium system
- During the 1970s, the political leaning of a candidate had become a major consideration in the matter of appointment of judges.
- Therefore, it was felt that the role of the state in the appointment of judges in terms of Article 124 (2) and 217 needed to be reconsidered.
- But then, in 1982 in S P Gupta’s case, the Supreme Court bench of five judges gave its approval to the primacy of the state in the matter of appointment of judges.
- However, that judgment was overturned subsequently by a bench of nine judges.
- Primacy of CJI: It held that the provisions for consultation with the Chief Justice of India, and the Chief Justices of the high courts in Articles 124 (2) and 217 of the Constitution were introduced because of the realisation that the Chief Justice is best equipped to know and assess the worth of a candidate, and his/her suitability for appointment as a superior judge.
- Initiation of proposal by CJI: It also held that the initiation of the proposal for appointment of a judge to the SC must be made by the CJI after wider consultation with senior judges, and likewise in the case of high courts.
- Confirmation of CJI: It was also held that no appointment of any judge to the SC or any high court can be made unless it conforms with the opinion of the CJI.
- Thus, what is known as the “collegium system” was born.
- Striking down of NJAC: In 2014, the government tried to make changes to the collegium system by introducing Article 124 (A) by a constitutional amendment, and by enacting National Judicial Appointments Commission Act, 2014.
- The SC has struck down both the amendment and the Act.
Has the collegium system succeeded?
- Nepotism: There have been cases where the nearest relative of Supreme Court judges has been appointed as a high court judge, ignoring merit.
- Ignoring the merit: Judges far lower in the combined All India Seniority of High Court judges were appointed to SC, and the reason assigned was that those selected were found more meritorious.
Conclusion
The collegium system is still the best, but it needs to weed out what is wrong in its actual working. It is hoped that the system will make course corrections in deserving cases.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Global trade in the post-COVID-19 world
Context
Past experiences suggest there is hope for global trade recovery in the post-COVID-19 world.
Impact of pandemic on the global and Indian economy
- In the last year, the devastating impact of COVID-19 pandemic has shrunk the world economy by 4.4% and global trade by 5.3%.
- Job losses in the world have been estimated to be to the tune of 75 million.
- India’s GDP contracted by 7.3% according to the National Statistical Office.
- About 10 million jobs were lost in India according to the Centre for Monitoring Indian Economy Pvt. Ltd.
- Around the world, countries have responded to pandemic-induced shortages with protectionist reactions and nationalist aspirations.
- Such a response has the potential to disrupt complex cross-border supply chains.
How economic shocks in the past laid foundation for institutional changes
- The Second World War was responsible for the creation of the Bretton Woods Institutions such as World Bank and International Monetary Fund (IMF) and International Trade Organisation (ITO) were created to help rebuild the shattered post-war economy.
- The General Agreement on Tariffs and Trade (GATT) was negotiated in 1947 as a means to reducing barriers to international trade.
- The oil shocks of the 1970s led to the establishment of the International Energy Agency (IEA) in 1974 and went on to create awareness on the need for global energy security.
- The financial crisis of 2008 led to the G20 Leaders Summit, an elevation from the G20 Finance Ministers forum in 1999.
- Increase in global trade: As a result of these developments global trade increased from a mere $60.80 billion in 1950 to $2,049 billion in 1980; $6,452 billion in 2000; $19,014 billion in 2019.
Changes in the global trade in post-Covid world
- Financial buffers due to stimulus package: Stimulus packages and forced savings in several countries in the last year have created financial buffers.
- Resilient supply chain: Global supply chains are expected to be resilient to help revive manufacturing with lower production costs, induce investments and promote technology transfers.
- Anti-dumping measures at WTO: In a post COVID-19 world, members of the World Trade Organization are expected to make rules to discipline errant nations that are known to dumping goods and erecting trade barriers through multilateral rules.
- Deeper economic integration through trade arrangements: Mutually beneficial trade arrangements that seek deeper economic integration will be entered into at the bilateral and regional levels.
- Dominance of technology: Countries that harness technology are expected to dominate international trade in future with a transformational impact on the global economy.
- Businesses will aim to harness data for innovation to remain ahead of the curve in a post-COVID-19 world.
Way forward for India
- The projections of the International Monetary Fund for India’s economic growth ahead are positive and in line with the general trends world-wide.
- Focus on value-added manufacturing: Building an ecosystem that incentivises value-added manufacturing and technology-induced finished products should form a part of our long-term strategy.
- Production Linked Incentive Scheme (PLI) schemes, if carefully nurtured, could lead the industry on that path.
- Support MSMEs: Supporting MSMEs with cheaper input costs, including raw material and intermediate goods would help sustain them with job creation at the local level.
- Developing a synergistic relationship between the big industry and MSMEs is at the core of a successful Atmanirbhar Bharat.
- Skill upgradation: Skills upgradation to global standards should form a part of India’s strategy in a post-COVID-19 world.
Conclusion
The patterns in the past leave much hope for optimism for global trade in the post-COVID-19 crisis in the collective belief that international trade is vital for development and prosperity.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: One Nation One Ration Card
Mains level: Paper 2- Labour law reforms in issues in implementation
Context
The central government has deferred the possible date of implementation of labour codes to October 1, 2021, prolonging the wait before employers and workers could enjoy the benefits extended by the labour codes.
Labour law reforms: Key provisions
- The government enacted the Code on Wages in August 2019 and the other three Codes, viz., the Industrial Relations Code, the Occupational Safety, Health and Working Conditions Code and Code on Social Security (CSS) in September 2020.
- Universal minimum wage: The codes would extend universal minimum wages and social security, enable enhanced industrial safety and the provision of social security to gig workers, among other things.
- Recognition of trade unions: The Industrial Relations Code provides for recognition of trade union(s) by employers, a labour right that eluded workers for seven decades.
- Flexibility to employers: Employers celebrated the extension of tremendous flexibility to them, even those unasked, such as relief from framing standing orders for most firms.
- The central government has deferred the possible date of implementation to October 1, 2021.
Issues in implementation
- State’s have not issued draft rules: Major States such as Tamil Nadu, Kerala, West Bengal, Maharashtra, Haryana and Delhi have not issued the draft rules under any codes.
- Even though the Code on Wages was enacted in August 2019, it was only in March 2021 that the central government notified the constitution of an advisory committee.
- Safety concerns persist: Industrial safety continues to be a grave concern even after the enactment of the Occupational Safety, Health and Working Conditions Code.
- Lack of clarity on the determination of minimum wage: On June 3, 2021, the government announced an expert committee with a tenure of three years to advise on minimum wages.
- Then, on July 12, 2021, the government announced that the wage index’s base year would be shifted from 1965 to 2019 to use the revised wage index to determine minimum wages.
- The Government seems to be facing difficulty regarding the implementation of minimum wages.
Conclusion
Despite the gazetting of four Codes, age-old laws are in force. That reflects poorly on the governance abilities of the governments.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Oil recovery rate
Mains level: Paper 3- Balancing the energy needs dependent on fossil fuel and environmental concerns
Context
The spread and speed of the destruction caused by climate change in recent weeks present our new Minister of Petroleum and Natural Gas with a policy dilemma. The article offers five policy suggestions to deal with the dilemma.
Energy dilemma facing India
- The events of the past month all over the world have caught even the most alarmist of climate scientists by surprise.
- These events brought into sharp relief the reality that there was no option of denying the consequential implications of the use of fossil fuels.
- However, the dilemma India faces lies in the fact that the Indian economy is heavily dependent on fossil fuels and there is no end in sight to this dependence.
- Further, India imports approximately 85 percent of its crude oil requirements and is exposed to the volatility of the international oil market.
Five policy changes needed
1) Reduce emphasis on domestic exploration
- Not easy to locate and difficult to develop: A review of the public sector’s exploration and production (EP) track record suggests that whilst India may well be sitting on substantial hydrocarbon reserves, these reserves are not easy to locate and, even when located, difficult to develop and produce on a commercial basis.
- The government has often compounded this economic challenge by placing administrative limits on marketing by companies and their pricing freedom.
- High risk and structural softness in the market: The fundamental point is that EP in India is a high-risk activity, and this risk is even greater today because of the longer-term structural softness of the petroleum market.
- The resources earmarked for exploration can be deployed more productively elsewhere.
2) Increase productivity of producing fields
- The ONGC needs to allocate increasing resources to improving the productivity of its producing fields.
- Low oil recovery rate: The average oil recovery rate in India was around 28 percent that is, for every 100 molecules discovered, only 28 were monetized.
- This number did not compare well with the global average of around 45 percent for fields of comparable geology.
- Use technology: The application of enhanced oil recovery (EOR) technology offers a relatively low-risk avenue for increasing domestic production.
3) Increase strategic reserves
- We hold currently strategic reserves equivalent to 12 days of imports.
- The government has approved plans to increase this buffer to 25 days.
- By comparison, China, the EU, South Korea, and Japan hold between 70-100 days of reserves.
- A significant portion of our oil imports came from the Middle East, predominantly Saudi Arabia, Iraq, and Iran.
- This region faces deep political and social fault lines and there is no knowing when our supply lines might get ruptured.
- We would, therefore, be well-advised to build contingency safeguards.
4) Restructure and reorganize public sector petroleum companies
- Consolidate upstream assets: In the first instance, the upstream assets should be consolidated under ONGC (the upstream assets of BPCL, IOC, HPCL, and GAIL should pass onto ONGC) and GAIL should be unbundled into a public utility gas pipeline company
- Diversify: Thereafter, these companies should be encouraged to look beyond hydrocarbons to build an “energy” enterprise.
- The restructuring will help cut back the “avoidable” costs of intra public sector competition.
- It will also reduce the inefficiencies of “sub-scale” operations.
- It will provide a focused platform for balancing the shorter-term need to provide secure and affordable hydrocarbons with the medium and longer-term imperative of developing clean energy.
5) Avoid siloed thinking
- The petroleum minister should not see his responsibility through the siloed prism of oil and natural gas.
- He should broaden the aperture and become the progenitor of the energy transition.
Conclusion
The dilemma referred to in the opening sentence will be easier to resolve our priorities are set within the framework of clean energy.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: CRPD
Mains level: Paper 2- Ensuring the dignity of persons with disability
Context
Twenty years ago on August 6 in Erwadi in Tamil Nadu’s Ramanathapuram, a fire broke out in a thatched shelter, engulfing 43 chained people who had psychosocial disabilities.
Legal provision for the persons with disabilities
- India ratified the Convention on the Rights of Persons with Disabilities (CRPD) in 2007.
- The Rights of Persons with Disabilities Act was enacted in 2016.
- The Mental Healthcare Act (MHCA) was enacted in 2017.
Failure of the states
- Sates have failed to uphold the human rights of people with disabilities in general and those with psychosocial and intellectual disabilities in particular.
- Only eight states/UTs — Karnataka, Andhra Pradesh, Uttar Pradesh, Jammu & Kashmir, Maharashtra, Odisha, Kerala, and West Bengal — have framed rules for implementation of MHCA.
- Unless we implement the law in letter and spirit, the Global Mental Health Movement will remain a mere buzzword and the CRPD-reliant MHCA will remain a law only on paper.
Violations of rights in private asylums
- Private asylums survive because of their close proximity to faith-based healing centres.
- Because mental health conditions carry a high stigma, caregivers flock to these faith-based facilities in the hopes of finding a cure.
- Private players take advantage of their vulnerabilities, forcing such persons with psychosocial issues to be grouped together and chained in these shelters.
- Chaining in any way or form is outlawed under Section 95 of the MHCA.
Way forward
- Human right approach: We must work to ensure that the human rights approach to disability is integrated into mental health systems, education, law, and bureaucracy.
- We move away from pathologisation, segregation, and a charity-based approach.
Conclusion
Implementation of rights of the persons with disability needs implementation in letter and spirit and human rights based approach.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Plastics Pact
Mains level: Paper 3- Plastic waste challenge
Context
The India Plastics Pact, the first in Asia, will be launched in September at the CII Annual Sustainability Summit.
Issue of plastic waste
- A 2019 report by the Center for International Environmental Law suggests that by 2050, greenhouse gas emissions from plastic could reach over 56 gigatonnes, 10-13% of the remaining carbon budget.
- Connection with livelihood: Viewed from the angle of livelihoods, post-consumer segregation, collection and disposal of plastics make up about half of the income of 1.5- 4 million waste-pickers in India.
- For India, the solution must be multi-pronged, systemic, and large scale, to create a visible impact. The Plastics Pacts model offers such a solution.
About Plastics Pacts model
- Business-led initiative: The Plastics Pacts are business-led initiatives and transform the plastics packaging value chain for all formats and products.
- The Pacts bring together everyone from across the plastics value chain to implement practical solutions.
- Integral to the Pact’s framework is the involvement of the informal waste sector crucial to post-consumer segregation, collection and processing of plastic waste.
- All Pacts unite behind four targets:
- 1) To eliminate unnecessary and problematic plastic packaging through redesign and innovation.
- 2) To ensure all plastic packaging is reusable or recyclable.
- 3) To increase the reuse, collection, and recycling of plastic packaging.
- 4) To increase recycled content in plastic packaging.
- It is active in a number of countries including the U.K., South Africa, and Australia.
- The first Plastics Pact was launched in the U.K. in 2018, by WRAP, a global NGO based in the U.K.
- It is now being brought to India by CII and WWF India.
Advantages
- Economic advantage: It can be expected to boost demand for recycled content, investments in recycling infrastructure, jobs in the waste sector, and beyond.
- Support EPR framework: The Pact will support the Extended Producer Responsibility framework of the government and improve solid waste management as envisioned in the Swachh Bharat Abhiyan.
- The India Plastics Pact focuses on solutions and innovation.
- Plastic production and management development: The Pact will encourage the development and maturing of the entire plastics production and management ecosystem.
- Drive circulatory of plastic: Apart from benefits to society and economy, delivering the targets will drive the circularity of plastics and help tackle pollution.
Conclusion
The India Plastics Pact will benefit society, the economy and the environment.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: ISDS
Mains level: Paper 3- Issue of retrospective taxation
Context
A bill introduced in Parliament last week aims to nullify the 2012 amendment in the Income Tax Act which made the income tax law retroactively applicable on indirect transfer of Indian assets.
Issue of taxation as a sovereign right of the state
- Several Investor-State Dispute Settlement (ISDS) tribunals have recognised the fundamental principle that taxation is an intrinsic element of the state’s sovereign power.
- The ISDS tribunals have also held that whenever a foreign investor challenges states’ taxation measures, there is a presumption that the taxation measures are valid and legal.
- For instance, an ISDS tribunal in Renta 4 v. Russia said that when it comes to examining taxation measures for BIT breaches, the starting point should be that the taxation measures are a bona fide exercise of the state’s public powers.
What are the limits on the taxation rights of a Country under BITs
- The two most used BIT provisions to challenge a state’s taxation measures are expropriation and the fair and equitable treatment provision.
- 1) Expropriation: In the context of expropriation, one of the key ISDS cases that explained the limits on the state’s right to tax is Burlington v. Ecuador.
- In this case, the tribunal held that under customary international law, there are two limits on the state’s right to tax.
- First, the tax should not be discriminatory.
- Second, it should not be confiscatory.
- 2) Fair and equitable treatment: In the context of the fair and equitable treatment provision, foreign investors have often challenged taxation measures as breaching legal certainty, which is an element of the fair and equitable treatment provision.
- Although legal certainty does not mean immutability of legal framework, states are under an obligation to carry out legal changes such as amending their tax laws in a reasonable and proportionate manner.
So, what happened in Cairn Energy v. India case?
- The tribunal in Cairn Energy v. India said that taxing indirect transfers is India’s sovereign power and the tribunal would not comment on it.
- Legal certainty: The tribunal said that India’s right to tax in the public interest should be balanced with the investor’s interest of legal certainty.
- The tribunal held that the public purpose that justifies the application of law prospectively will usually be insufficient to justify the retroactive application of the law.
- India argued that the 2012 amendment was to ensure that foreign corporations who use tax havens for the indirect transfers of underlying Indian assets pay taxes.
- However, the tribunal held that this objective could be achieved by amending the income tax law prospectively, not retroactively.
- The tribunal did not rule against retroactivity of tax laws per se but against the retroactive application that lacked public policy justification.
Way forward
- Carving out taxation from BITs: India in its 2016 Model BIT carved out taxation measures completely from the scope of the investment treaty.
- Nonetheless, carving out taxation measures from the scope of the BIT does not mean that states are free to do as they please.
- India should exercise its right to regulate while being mindful of its international law obligations, acting in good faith and in a proportionate manner.
- ISDS tribunals do not interfere with such regulatory measures.
Conclusion
In sum, the debate never was whether India has a sovereign right to tax, but whether this sovereign right is subject to certain limitations. The answer is an emphatic ‘yes’ because under international law the sovereign right to tax is not absolute.
Back2Basics: Investor-State Dispute Settlement (ISDS) tribunal
- ISDS is a mechanism included in many trade and investment agreements to settle disputes.
- Settling these investor disputes relies on arbitration rather than public courts.
- Under agreements which include ISDS mechanisms, a company from one signatory state investing in another signatory state can argue that new laws or regulations could negatively affect its expected profits or investment potential, and seek compensation in a binding arbitration tribunal.
- The system only provides for foreign companies to sue states, not the other way around.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: CERC
Mains level: Paper 3- Issues with aging out old power plants based on age
Context
As part of the Union Budget address for 2020-21, the Finance Minister, Nirmala Sitharaman, said that the shutting down of old coal power plants, which are major contributors to emissions, will aid the achievement of India’s Nationally Determined Contributions.
Advantages of shutting down old coal power plants
- The availability of under-utilized newer and presumably more efficient coal-based capacity means that shutting down older inefficient plants would lead to improved efficiencies, reduced coal usage, and hence, cost savings.
- It would be uneconomical for old plants to install pollution control equipment required to meet the emission standards announced by the Environment Ministry, and hence it would be better to retire them.
Why the decision needs finer scrutiny?
- Some old plants are cost-effective: There are also several old plants, which generate at lower costs, such as plants at Rihand, Singrauli, and Vidhyanchal (Madhya Pradesh).
- Locational advantage: This may be due to locational advantage rather than efficiency, as older plants are likely to be located closer to the coal source, reducing coal transport costs.
- Not cost-effective: Savings in generation cost from shutting down plants older than 25 years would be less than ₹5,000 crore annually, which is just 2% of the total power generation cost.
- Not effective in reducing coal consumption: Savings in coal consumption by replacing generation from plants older than 25 years with newer coal plants are also likely to be only in the 1%-2% range.
- Economical even after installing pollution control equipment: There are some old plants that may continue to be economically viable even if they install pollution control equipment as their current fixed costs are very low.
Important roles played by old thermal power plants
- A significant part of power supply: Plants older than 25 years makeup around 20% of the total installed thermal capacity in the country and play a significant role in the country’s power supply.
- Supporting renewable: To support the growing intermittent renewable generation in the sector, there is an increasing need for capacity that can provide flexibility, balancing, and ancillary services.
- Old thermal capacity, with lower fixed costs, is a prime candidate to play this role until other technologies (such as storage) can replace them at scale.
- Political economy risk: There is also a political economy risk, as aggressive early retirement of coal-based capacity, without detailed analyses, could result in real or perceived electricity shortage in some States, leading to calls for investments in coal-based base-load capacity by State-owned entities.
Way forward
- Nuanced analysis needed: Instead of using age as the only criteria, a more disaggregated and nuanced analysis needs to be used.
- Constraint related to renewable and increasing demand: We also need to take into account aspects such as intermittency of renewables, growing demand, and the need to meet emission norms, to make retirement-related decisions.
Conclusion
It may be prudent to let old capacity fade away in due course while focusing on such detailed analysis and weeding out the needless capacity in the pipeline, to derive long-term economic and environmental benefits.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: SAGAR
Mains level: Paper 3- Security and growth for all in maritime domain
Context
In an innovative departure from normal practice, Prime Minister Narendra Modi will preside (in virtual mode) over the UN Security Council, on Monday (August 9) when India holds the President’s chair for one month. The subject of debate is maritime security.
Issues with global maritime security
- FON issue: There is tension in the South China Sea over freedom of navigation (FON) rights in international waters and how China has laid claim to “territoriality” based on artificial structures (not natural islands).
- This formulation has not been accepted by the US that has exercised transit rights in these waters.
- Many ASEAN nations and Quad members such as Japan, Australia and India subscribe to the principle of FON and do not accept the Chinese interpretation of the “nine-dash-line”.
- Traditional challenges: Piracy and non-traditional challenges at sea such as gun-running and smuggling are old chestnuts.
- Maritime pollution: Accidents in the oceans have added to the anxiety about marine pollution and its downstream consequences for the health of the oceans.
- Global warming: A UN report has come up with grim statistics about the impact of global warming on the chemistry of oceans.
- This study notes that oceans have become more acidic as sea water absorbs more carbon dioxide.
- Furthermore, the upper layers of the open ocean have lost between 0.5 per cent and 3.3 per cent of their oxygen since 1970 as temperatures have risen.
Way forward for India at UNCS: Security and equitable growth
- The subject to be deliberated upon by the UNSC members is “Enhancing maritime security: A case for international cooperation”.
- This would be an extension of India’s advocacy of SAGAR (security and growth for all in the region) in relation to the Indian Ocean region (IOR).
- At the UNSC strategic and security issues such as the South China Sea and FON would find little consensus as China is a permanent member and would stall any meaningful debate.
- Focus on global goods: What may find support for a useful debate at the UNSC would be those areas that could be brought under the rubric of the “global good”.
- For instance, the welfare of seafarers who are the sinews of the global merchant marine, has received scant attention in this Covid-scarred period and the IMO (International Maritime Organisation) has been unable to effectively address such issues.
- Correlation with globalisation: India can also advocate for sustained focus on the maritime domain and the correlation with globalisation, the blue economy, the health of the ocean and the overall impact on human security.
Conclusion
Security and equitable growth for all by husbanding the global ocean for future generations is a laudable goal and encouraging the UNSC to prioritise this issue is a worthy cause.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: ASEAN
Mains level: Paper 3- Adoption of digital transformation
Context
COVID-19 has forced South Asia to take a quantum leap in digitalisation, which will help shape its future prosperity.
Spike in digitisation due to Covid
- In India, COVID-19 accelerated the launch of the National Digital Health Mission, enhancing the accessibility and the efficiency of health-care services by creating a unique health ID for every citizen.
- Pandemic accelerated South Asia’s embrace of e-commerce, boosted by digital payment systems.
- Bangladesh alone witnessed an increase of 70-80% in online sales in 2020, generating $708.46 million in revenues.
- Even smaller nations such as Nepal recording almost an 11% increase in broadband Internet users.
The dangers of a digital divide
- A wide digital divide persists in access and affordability, between and within the countries of South Asia.
- Despite having the world’s second-largest online market, 50% of India’s population are without Internet with 59% for Bangladesh and 65% for Pakistan.
- This divide could permanently put children out of school, place girls at risk of early marriage, and push poor children into child labour costing economies billions of dollars in future earnings.
- Businesses too have paid a heavy price for the gap in digital solutions, whereby many South Asian firms failing to embrace e-commerce or other cloud-based technologies to survive the financial chaos of the novel coronavirus pandemic.
Asian digitalisation
- Digital transformation is a global imperative with the adoption of advanced technologies.
- At the forefront of Asian digitalisation are countries such as Singapore, Japan, and South Korea recognised as global technological hubs.
- The digital boom in the Association of Southeast Asian Nations (ASEAN) economies is pushing a “common market” initiative, fostering regional economic integration and enhancing global competitiveness.
- South Asia has also made significant strides in the adoption of digital technologies such as the Digital Bangladesh Vision 2021.
How digitalisation can help South Asia?
- The region still has a long way to go.
- Jobs in e-commerce: E-commerce could drive the post-pandemic growth in South Asia, providing new business opportunities and access to larger markets.
- In India, e-commerce could create a million jobs by 2030 and be worth $200 billion by 2026.
- Growth driven by Fintech: Fintech could drive significant growth and reduce poverty by building financial inclusion.
- Increase in productivity: A timely, inclusive, and sustainable digital transformation can not only bolster productivity and growth but also serve as a panacea for some of the region’s socio-economic divides.
Steps need to be taken
- To reap the dividends of digital transformation, South Asia needs to address legal, regulatory and policy gaps as well as boost digital skills.
- Digital infrastructure: A robust digital infrastructure is a sine qua non and there exists a huge financing gap.
- India alone needs an annual investment of $35 billion to be in the top five global digital economy.
- Private-public partnership: Public-private partnership needs to be leveraged for the region’s digital infrastructure financing.
- Regulatory roadblocks need to be addressed as e-commerce regulations are weak in South Asia.
- Digital literacy: There would be no digital revolution without universal digital literacy.
- Governments and businesses need to come together to revamp the education system to meet the demand for digital skills and online platforms.
- Cybersecurity measures: The crossflow of data and personal information calls for stringent cybersecurity measures as many have experienced painful lessons in data privacy during the pandemic.
- Digital Single Market Proposal: By addressing issues such as regulatory barriers on currency flows inhibiting online payment to transport-related constraints for cross-border e-commerce activities, South Asia can emulate the European Union’s Digital Single Market Proposal.
- Collaboration: Concerted collaboration at all levels is needed to push South Asia out of stagnancy and towards a digital future of shared prosperity.
- Partnership for digital revolution: During the pandemic, South Asian nations joined hands to collectively battle the crises by contributing towards a COVID-19 emergency fund, exchanging data and information on health surveillance, sharing research findings, and developing an online learning platform for health workers.
- If the eight nations (Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan and Sri Lanka) can start walking the talk, partnership for a successful digital revolution is plausible.
Conclusion
A shared “digital vision” could place the region on the right track towards the Fourth Industrial Revolution.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Inner Line Permit
Mains level: Paper 2- Assam-Mizoram border dispute
Context
The violent stand-off between the Assam and Mizoram armed policemen at Vairengte in Mizoram, on July 26, took six lives and left over 50 injured is the culmination of a long-standing border dispute.
History of the boundary issue
- The ‘inner line’ boundary of the Lushai hills was ‘fixed’ in 1875 on the southern border of Assam’s Cachar district.
- In line with the colonial practice of ‘fixing’ borders, this boundary was however not ‘precise’ as it was drawn largely using natural markers such as rivers and hills.
- In post-independent India, the Mizoram government has accepted this boundary in preference over the subsequent revisions made by the colonial government.
- There was a change in boundary when the Inner Line Permit under the Bengal Eastern Frontier Regulation, 1873 was extended to the Lushai hills district in 1930 and 1933.
- The Mizoram government perceives that the boundary instituted by these revisions amounted to unilateral superimposition.
- These revisions are also seen to conspicuously fail to recognise the Mizo’s long-standing historical rights to use the un-demarcated southern border of Cachar as their hunting ground, for jhum cultivation, and as sites of their resource extraction including rubber and timber.
- However, considering that borders cannot be driven by perception but by institutionalised rules and laws, Assam’s government continues to refuse to accept Mizoram’s standpoint.
- The Assam government considers Mizo plantation and settlements in the Inner Line Reserve Forest areas as an ‘encroachment’.
People-centric Vs. State-centric approach in dispute
- At the heart of this dispute is the contending approaches of the Assam and Mizoram governments to ‘borders’, namely ‘state-centric and ‘people-centric approaches.
- The Assam government represent a continuum of the colonial ‘state-centric’ approach to borders which gives premium to legal, juridical and administrative recognition and protection of the border.
- The Mizoram government advocate a ‘people-centric approach seeks to give a premium to the historical and traditional rights of the local indigenous people.
- The Mizoram government also advocate the principle of uti possidetis juris (‘as you possess under law’, including customary law) on the other hand.
Way forward
- Historical context: Fixing the Assam-Mizoram border and resolve the dispute need to be sensitive to the historical context.
- Deep historical knowledge, sensitivity and an accommodative spirit need to inform dialogue and negotiation under the neutral supervision of the Centre.
- Inter-governmental forum: It is about time that the Centre sets up a permanent inter-governmental forum to involve important stakeholders in order to effectively manage border and territorial conflicts.
- Quick-fix solution should be avoided: Any quick-fix solution driven by temporal electoral considerations should be avoided if we were to resuscitate and sustain interdependent Assam-Mizoram borders and beyond.
Conclusion
The resolution should be sensitive to the possibility of fluid and overlapping sovereignty, where forest ‘commons’ are seen not simply as sites of revenue-extraction but as powerful symbols of identity and sustainable livelihood resources for the local people.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: SOFI report
Mains level: Paper 2- Rising food insecurity
Context
The latest edition of the State of Food Security and Nutrition in the World (SOFI) report, released jointly by five UN organisations in July, reveals that the pandemic and failure on the part of state to combat its effects, has led to a significant increase in the prevalence of hunger and food insecurity in the country.
About the report
- Estimates on food insecurity presented in the SOFI report are based on two globally-accepted indicators of food insecurity:
- 1) The Prevalence of Undernourishment (PoU), which estimates the proportion of people suffering from chronic deficiency of calories.
- 2) A more recently developed an experience-based indicator called the Prevalence of Moderate and Severe Food Insecurity (PMSFI).
- The PoU estimates are based on estimates of per-capita supply of food and distributional parameters estimated using the national consumption surveys
- On the other hand, PMSFI estimates are based on data collected through surveys that attempt to capture people’s experiences of food insecurity (such as eating less, modifying diet to eat cheaper food etc).
- No assessment of food insecurity during a pandemic: The PMSFI estimates presented in the report are particularly important because, since the outbreak of the pandemic, the Indian government has not undertaken any official assessment of food insecurity in the country.
- Not only has the government not conducted its own consumption or food security surveys, it does not approve the publication of results based on the Gallup World Poll.
- As a result, estimates for India are not published in the SOFI reports.
- However, these can still be obtained indirectly because the data are presented for South Asia and for “South Asia (excluding India)”.
- Estimates for India can be obtained by comparing the two sets of data.
What the report says
- According to the data presented in the report, the prevalence of moderate to severe food insecurity in India rose by about 6.8 percentage points in 2018-20.
- Data show that there were about 43 crore of moderate to severe food-insecure people in India in 2019.
- As a result of the pandemic-related disruptions, this increased to 52 crore in one year.
- In terms of prevalence rates, moderate to severe food insecurity increased from about 31.6 per cent in 2019 to 38.4 per cent in 2021.
Causes of food insecurity in India
- Economic distress: The problems of hunger and food insecurity are grave in India because of widespread economic distress, high unemployment and high levels of inequality.
- Dependence on informal economy: A large proportion of the poor is dependent on the informal economy in which incomes are too low and uncertain.
- Unemployment: Unemployment rates have risen sharply over the last few years, shrinking public investment and the economic slowdown have compounded the distress among working classes and the peasantry.
- With low and uncertain incomes, families dependent on the informal economy do not have assured access to adequate and nutritious food.
Way forward
- Monitoring system: There is an urgent need for the government to establish systems for regular monitoring of the food security situation in the country.
- Universal access to food: It is ironic that the country with the largest stock of grain in the world — 120 million tonnes as of July 1, 2021 — accounts for a quarter of the world’s food-insecure population.
- Universalising access to the public distribution system is the need of the hour at least during the pandemic.
Conclusion
The increasing severity of food insecurity in India points to the urgent need for measures by the government to ensure the right to food of citizens of India.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: 1991 reforms
Mains level: Paper 3- Changes brought about by 1991 reforms
Context
It has been 30 years since the spirit of liberalisation was unleashed in 1991 economic reforms. The private sector, which had been seen very differently up to 1990, was placed at the centre of the reform process. And this has continued and grown since then.
Challenges and opportunities for Indian industry after economic reforms
1) Entry of MNCs and centrality to consumers
- The first challenge was the entry of MNCs through the joint venture (JV) route.
- Centrality to consumers: The reforms gave centrality to the consumer who till 1991 did not have a choice.
- The Indian consumer was given choices and companies, both foreign and Indian, wanted to be their first choice.
- Growth in demand: The surge of new demand from the marketplace transformed the scenario, reflected in GDP growth rapidly moving up to 7 per cent per annum.
2) Increased competition
- For the first time, Indian companies faced real competition from other Indian as well as foreign companies.
- But, many corporates restructured themselves and transformed into competitive forces.
- The new reality of reduced customs duties and industrial licensing disappearing, removed the protection umbrella and Indian companies, by and large, who had been planning for this day, were ready to face this challenge.
3) Government-industry partnership
- Till June 1991, the government and industry were at a distance from each other.
- June 1991 changed all of that, the government’s dialogue with industry deepened, consultations were frequent.
- Feedback on what was happening on the ground was taken regularly.
- A government-industry partnership became a reality.
4) Boost to aspiration of industries
- The most significant change brought about by the reforms pertained to the level of “aspirations” of the industry.
- There was excitement and ambition to be world-class.
- Rise of IT industry: In this, the IT industry led by TCS, Infosys and Wipro played a major role.
- They showed that Indian engineers and managers were the best in the world.
- They exuded confidence which spread to others.
5) Boost to entrepreneurship
- Not just the big industry, but also, the small and medium sectors that became part of the new energy in industry.
- Component manufacturing and exports were new initiatives from ancillaries and suppliers of major manufacturers.
6) Infrastructure
- The public sector had a monopoly over infrastructure.
- This changed and the private sector was invited to participate, to get into public-private partnerships and end the government’s monopoly.
7) Birth of new private sector bank
- Banking had been nationalised in 1969.
- But the reforms of 1991 gave birth to a new private sector bank — HDFC Bank — which, after due diligence by the government and the Reserve Bank of India, opened its doors in 1994.
- This was a huge step forward in the reform process.
8) Improvement in corporate governance
- An industry-led initiative brought out the first-ever task force guidelines and report on corporate governance.
- This was followed by many other actions and policies.
Conclusion
There is still a long way to go, but the die that was cast in 1991 has led to a new tsunami of change.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 370
Mains level: Paper 2- J and K after 2 years of repeal of Article 370
Context
Two years ago, India bid farewell to Articles 370 and 35 (A), marking the start of a new era in the politics of Jammu and Kashmir.
Assessing the impact of changes on five parameters
1) National unity
- Articles 370 and 35 (A) created an unnatural and unhealthy divide in our nation.
- For every law passed, every rule made, we had to ascertain whether it applied to J&K or not.
- Today, such distinctions are history, J&K has been fully integrated with the other states and Union Territories.
2) Democracy at the grass-root level
- A healthy culture of grassroots-level participation was absent.
- Panchayat polls held: One of the critical deliverables for J&K was to hold panchayat polls, which were finally held in 2020.
- This one step will go a long way in shaping the development paradigm in Jammu and Kashmir.
- Political activity has also picked up across Jammu and Kashmir.
- The Centre’s emphasis on a proper delimitation followed by full-fledged elections is in line with the commitments made to the people of Jammu and Kashmir.
3) Peace
- The third parameter is that of peace.
- The memories of 2008, 2010 and 2016 are still fresh in the minds of the people of Jammu and Kashmir.
- An effort was made to reignite such sparks of tension after the decisions on Article 370 and 35 (A) but the Valley as well as Jammu have remained peaceful.
4) People’s aspirations
- Jammu and Kashmir did not have RTI laws and its SC, ST and OBC communities were not able to get the benefits of reservation
- The fact that the most marginalised groups can now get reservation benefits is a major leap forward in fulfilling the aspirations of the people of J&K.
5) Economic growth
- The Valley is today abuzz with news of action against corruption in key departments and financial bodies in the state.
- Money being sent for public good was being misused by vested interest groups.
- The economic upliftment in the Valley began with the Prime Minister’s Package of 2015.
- This set the stage for extensive spending on physical and social infrastructure.
- With the going of 370 and 35 (A) there is great hope that tourism will pick up in the Valley.
- Incentives given to different sectors of the economy — be it saffron farmers or those who fish trout — combined with a largely peaceful environment is empowering many lives.
- With corruption and leakages drastically reduced, resources are reaching the intended beneficiaries.
Conclusion
The situation in Jammu and Kashmir was never easy. As we enter the Amrut Mahotsav, it is for us to see the new realities in J&K. The people of the state have got the wings to fly and, in the years to come, J&K will make even greater contributions to India’s growth and development.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: GVA
Mains level: Paper 3- Issues in GST
Context
After four years, the promise of the Goods and Services Tax (GST) remains substantially unrealised.
Why tax base of GST is not expanding
- The GST is strongly co-related to overall GDP.
- Revenue collection of the GST is dependent on the nominal growth rate of Gross Value Added (GVA) in the economy.
- Since inception, GVA per quarter has been between ₹40-lakh crore to ₹47-lakh crore and GST revenue has not been higher than ₹2.7-lakh crore to ₹3.1-lakh crore.
- The Tax to Gross value addition is only about 5% to 6.5% though GVA growth was much higher.
- Issues: A very large segment is covered by exemption, composition schemes, evasion and lower tax rate.
Five Issues with the GST structure
1) Dominance of the Centre
- The political architecture of GST is asymmetrically loaded in favour of the Centre.
- No body to adjudicate: There is no particular body is tasked to adjudicate if there is a dispute between States and between the Centre and the States.
- Centre’s domination: In the voting, the central government has one-third vote and States have two-thirds of total votes.
- All states have equal voting rights regardless of size and stake.
- With the support of a dozen small States whose total GST collection is not more than 5% of the total central government can dominate the decision making process in GST Council.
- Small states dictate the terms: With equal value for each States’ voting, larger and mid-sized States feel shortchanged.
2) Flaw in tax structure
- Nearly 45% to 50% of commodity value is outside the purview of the GST, such as petrol and petroleum products.
- Certain states not getting revenue as origin state: States which export or have inter-State transfers or mineral and fossil fuel extractions are not getting revenue as the origin States and need a compensation mechanism.
- The pre-existing threshold level of VAT has been tweaked too often which has led to an evaporation of tax base incentivising, enabling evasion and mis-reporting.
- Most trading and retail establishments, (however small) are out of the fold of the GST.
- At the retail level, irrespective of whether Input Tax Credit (ITC) is required or not, the burden can be passed off to the consumer.
- As a result, the loss could be as high as one third.
3) Exemptions
- Exemptions from registration and taxation of the GST have further eroded the GST tax base compared to the tax base of the pre-existing VAT.
- Ground for evasion: Exemptions are purely distortionary and also provide a good chance to remain under the radar, thereby directly increasing evasion or misclassification.
- Theoretically, exemptions at the final stages reduce tax realisation.
- Multiple rates: As multiple rates are charged at different stages, it goes against the lessons of GST history.
- This tax works well with a single uniform tax rate for all commodities and services at all stages, inputs and outputs alike.
- While most countries have a single rate, India stands out and is among the five countries to have four rates/slabs.
4) Exclusion
- Against the interest of States: Petroleum products remaining outside the purview of GST has helped the Centre to increase cesses and decrease central excise, in what would otherwise have been shareable with the States.
- Now, States will be keen on including petrol and diesel under the GST as their share of tax goes up in the process, even if there is a special rate fixed for it.
- Equity requires that petrol and diesel be brought under the GST.
- Cascading of taxes: Apart from the complexity it creates in record keeping and ‘granting ITC’, in the present form it also leads to a cascading which the GST avowedly tried to avoid.
5) Lack of compliance
- Compliance with GST return (GSTR-1) filing stipulation and the resultant tax information is not up to date.
- Fraudulent claims of Input Tax Credit (ITC) because of a lack of timely reconciliation are quite high though it has come down by two thirds.
- Tax evasion, estimated by a National Institute of Public Finance and Policy’s paper, is at least 5% in minor States and plus 3% in the major States.
Conclusion
Policy gaps along with compliance gaps do need to be addressed. Without proper tax information, infrastructure and base, the States would go in for selective tax enforcement. In the long run, voluntary compliance will suffer and equity in taxation will be violated.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Capital account
Mains level: Paper 3- Making rupee a global reserve currency
Context
India will celebrate 100 years of Independence in 2047. This article makes the case that prosperity is possible and best accomplished by the goal of making the rupee a global reserve currency by India@100.
What is the purpose of having forex reserves?
- Official foreign exchange reserves of about $12 trillion across 150 countries are currently stored in eight currencies: 55 per cent in US dollars, 30 per cent in euros, and 15 per cent in six other currencies.
- Protection in case of volatility: This concentration is inevitable given exploding trade, rising capital flows, and the less acknowledged motivation of protecting your reserves from your currency’s volatility.
- A reserve currency has to serve as a medium of exchange, a store of value, and a unit of account.
Steps India would require to take
- Full capital account convertibility: To fulfil the ambition of becoming the reserve currency, the first step is full capital account convertibility, as suggested by the Tarapore Committee in 1997.
- Advocate rupee invoicing: Dollar investors in the last decade not experiencing the usual big bite out of rupee returns is useful for advocating trading partners to start rupee invoicing.
- Offshore corporate rupee borrowing: Raising corporate rupee borrowing offshore and onshore will also help.
- Digital currency: We need to accelerate our CBDC (central bank digital bank currency) plans.
- Take payment networks to a global level: We need to take our UPI payment technology to the world, the dollar gets heft from global networks like Visa, MasterCard and Swift.
- Raise tax to GDP ratio: Fiscal policy must raise our tax to GDP ratio, raise the share of direct taxes in total taxes, and keep our public debt to GDP ratio under 100 per cent.
- Monetary policy: Monetary policy must control inflation while moderating central bank balance sheet size.
- Economic policy: Economic policy must raise the productivity to reach goals in formalisation, urbanisation, financialisation (100 per cent credit to GDP ratio), industrialisation (less than 15 per cent farm employment), internationalisation (higher share of global trade) and skilling.
- Institutional reforms: These goals must be complemented by reinforcing institutions that signal rule of law; cooperative federalism, press freedom, civil service effectiveness, and judicial independence.
How it will help India?
- Becoming a global reserve currency is helpful because it indirectly aligns fiscal, monetary, and economic policy.
- Low-interest rate: The main advantage is the “exorbitant privilege” of lower real interest rates.
- Edge over China: The 2 per cent renminbi share in global reserves — despite a 25 per cent increase last year — doesn’t reflect their status as the world’s second-largest economy and biggest trading nation.
- China’s astounding economic success seems to be making China overconfident.
- Chinese overconfidence creates an opportunity for India.
Conclusion
Prosperity for all Indians by India at100 — a precondition for a country where the mind is without fear and the head is held high — needs bold reforms in the next 25 years. These reforms are best measured by the wholesome and achievable goal of the rupee becoming a global reserve currency by 2047. The journey is the reward.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now