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  • Freedom of Speech – Defamation, Sedition, etc.

    The sedition law must go

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Section 124A of IPC

    Context

    By order dated May 11, 2022, a Bench presided over by the Chief Justice of India, has directed that the petitions challenging the Section 124A be listed for final determination in the third week of July 2022; and that in the meantime suspend the use of Section 124A IPC.

    Historical background of Section 124A

    • With effect from 1870, (as amended in 1955), Section 124A of the Penal Code read:

    “Whoever by words, spoken or written, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection, towards the Government established by law in India shall be punished with imprisonment for life…”.

    • “Sedition” is the vaguest of all offences known to the criminal law.
    •  In colonial times, it was defined expansively in order to uphold the majesty of British power in India.
    • Before 1950, there were several Court decisions in operation on Section 124A; amongst them was Bal Gangadhar Tilak’s case (1897).
    • Absence of affection: In Bal Gangadhar Tilak’s case the Privy Council declined to grant leave to appeal, affirming that “disaffection” only meant “absence of affection in any degree towards the British rule or its administration or representatives”, and that exciting of mutiny or rebellion or actual disturbance of any sort was “absolutely immaterial”.
    • With the establishment of a Federal Court by the Government of India Act, 1935, in Niharendu Dutt Majumdar And Ors. vs Emperor the Federal Court held that if the language of Section 124A were to be read literally “it would make a surprising number of persons in India guilty of sedition and that no one, however, supposes that it is to be read in this literal sense”
    • However, in 1947 it was precisely in this literal sense that the interpretation of Section 124A was reiterated by a Bench of five judges of the Privy Council (AIR 1947 P.C. 82) in which it was declared that: “If the Federal Court had given their attention to Tilak’s case (1897) they should have recognised it as an authority… by which they were bound”.
    • With the advent of the Constitution of India on January 26, 1950, this interpretation of Section 124A became “the law in force immediately before the commencement of the Constitution”.

    Section 124A after 1950

    • Article 372: It stated that all laws in force in the territory of India immediately before the commencement of the Constitution shall continue in force therein until altered or repealed or amended by a competent legislature or other competent authority.
    • Protected due to Article 19(2): In 1962, in criminal appeals arising from the states of Bihar and Uttar Pradesh, a Constitution Bench of the Supreme Court held that though Section 124A “clearly violated” the fundamental right to freedom of speech and expression in Article 19(1)(a), it was not unconstitutional only because it was protected from challenge by the words “in the interests of public order” in Article 19(2).

    Conclusion

    This background has now become pertinent and relevant, because in a fresh batch of writ petitions filed in 2021, the constitutionality of Section 124A (IPC) has been once again challenged in the Supreme Court.

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  • Use of statecraft for long-term solutions to security problems

    op-ed snap | Security Issues | Mains Paper 3: Border Area Security Challenges

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Use of statecraft in finding solutions to security problems

    Context

    In many countries, both the authorities and security agencies are beginning to acknowledge the importance of resorting to statecraft as a vital adjunct to the role played by the security agencies.

    The important role of statecraft in security

    •  Statecraft involves fine-grained comprehension of inherent problems; also an ability to quickly respond to political challenges.
    • It further involves strengthening the ability to exploit opportunities as they arise, and display a degree of political nimbleness rather than leaving everything to the security agencies.
    • It entails a shift from reposing all faith in the security establishment to putting equal emphasis on implementation of policies and programmes.
    • Two prime examples which provide grist to the above proposition are the prevailing situation in Jammu and Kashmir and the continuing problem involving Maoists.
    • The need to use statecraft to deal with quite a few other internal security problems — some of which have lain dormant for years — is also becoming more manifest by the day.

    Security issues in various regions

    • Jammu and Kashmir: While Jammu and Kashmir has been a troubled region ever since 1947, the situation has metamorphosed over the years.
    • No proper solution has emerged to a long-standing problem.
    •  Irrespective of the reasons for the latest upsurge in violence, what is evident is that Jammu and Kashmir has again become the vortex of violence.
    • Evidently, the doctrine of containment pursued by the Jammu and Kashmir police and security agencies is not having the desired effect.
    • In Jammu and Kashmir today, as also elsewhere, there is no all-in-one grand strategy to deal with the situation.
    • The missing ingredient is statecraft which alone can walk in step with the changing contours of a long-standing problem.
    • Punjab: The recent discovery of ‘sleeper cells’ in the Punjab clearly indicates the potential for the revival of a pro-Khalistan movement — which once ravaged large parts of the Punjab.
    • While pro-Khalistani sentiment is present in pockets in the United Kingdom and in Europe, it has not been in evidence in India for some time.
    • Hence, the recent attack by pro-Khalistan elements on the headquarters of the Punjab Police Intelligence wing in Mohali was a rude shock to the security establishment.
    • The incident is a reminder that militancy in the Punjab has not been permanently extinguished, and will need deft statecraft to nip it in the bud.
    • North-east: In India’s North-east, more specifically in the States of Assam and Nagaland, there are again incipient signs of trouble which, for the present, may need use of statecraft rather than the security forces. 
    • In Assam, the United Liberation Front of Asom–Independent (ULFA-I) is trying to revive its activities after a long spell of hibernation.
    • Likewise in Nagaland, where the National Socialist Council of Nagalim (I-M) has recently initiated a fresh push for a solution of the ‘Naga political issue’, the situation is pregnant with serious possibilities.
    • Both instances merit the use of statecraft so that the situation does not get out of hand.
    • South India: In the South, intelligence and police officials appear concerned about a likely revival of Liberation Tigers of Tamil Eelam (LTTE)-sponsored activities in Tamil Nadu.
    • This stems from a possible revival of LTTE-sponsored militancy in Sri Lanka following the recent economic crises and uncertainty there.
    • This situation again needs deft statecraft to prevent a resurgence of the past.

    Conclusion

    India faces several challenges today, but the answer to this is neither grand strategy nor grand simplifications nor resort to higher doses of security. A properly structured set of policies, having liberal doses of statecraft in addition to a proper set of security measures, is the best answer to India’s needs, now and in the future.

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  • Russian Invasion of Ukraine: Global Implications

    The return of the great power rivalries

    op-ed snap | International Relations | Mains Paper 2: Effect Of Policies & Politics Of World On India’S Interests

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Implications of Ukraine war for European security

    Context

    The post-Cold War period of peace in Europe is more an aberration than norm in the continent’s history of conflicts.

    Background of the First World War

    • The Russian power had collapsed in its far east after the war with Japan in 1904-05.
    • Faced with the erosion of Russian influence and the rise of Wilhelmine Germany, which together threatened to alter Europe’s balance of power, France and Britain, competing colonial powers, came together. 
    • France had already reached an alliance with Russia.
    • The three would later form the Triple Entente, triggering a dangerous security competition in Europe with the Triple Alliance (Germany, Austria-Hungary and Italy), which would eventually lead to the First World War in 1914.
    • What triggered the great power security competition in the run-up to the First World War was the phenomenal rise of Wilhelmine Germany as a military and industrial power and the regional hegemons’ response to it.

    Similarities with the past

    • When Otto von Bismarck became the Minister-President of Prussia in September 1862, there was no unified German state.
    •  Bismarck adopted an aggressive foreign policy, fought and won three wars — with Denmark, Austria and France — destroyed the confederation, established a stronger and larger German Reich that replaced Prussia.
    • Bismarck stayed focused on transforming Germany internally in his last two decades.
    • It was on the foundation Bismarck built that Wilhelmine Germany turned to weltpolitik in the early 20 century, seeking global domination.
    • If Bismarck inherited a weak, loosely connected group of German speaking entities in 1862, Russian President Vladimir Putin got a Russia in 2000 that was a pale shadow of what was the Soviet Union.
    • Bismarck spent his years in power expanding the borders of Germany and building a stronger state and economy.
    • The post-Cold War Russia initially stayed focused on the restoration of the state and the economy, and then sought to expand its borders and challenge the continent’s balance of power — first the Crimean annexation and now the Ukraine invasion.
    • While NATO’s expansion deepened Russia’s security concerns, driving it into aggressive moves, Russia’s aggression has strengthened NATO’s resolve to expand further into Russia’s neighbourhood.

    Offensive realism

    • Offensive realists argue that “revisionist powers” tend to use force to rewrite the balance of power if they find the circumstances are favourable, while the status quo powers, or the existing regional hegemons, would seek to thwart any new country attaining more power at their expense.
    • The result of this type of competition is permanent rivalry and conflict.
    • One major difference between the era of Wilhelmine Germany and modern Russia is that there were no well-defined international laws in the 19th and early 20th centuries.
    • The international system has evolved ever since.
    • But its basic instincts, as realists would argue, have not changed much.
    • Mr. Putin’s Russia is not the first country that violated the sovereignty of a weaker power and flouted international laws in the “rules-based” order.

    Future of Europe’s security

    • Russia apparently had two strategic objectives in Ukraine —
    • One, to expand Russian borders and create a buffer.
    • And two, to reinforce Russia’s deterrence against NATO.
    • While Russia has succeeded, though slowly, in expanding its borders by capturing almost all of Ukraine’s east, the war has backfired on its second objective.
    • Russia’s inability to clinch a quick outright victory in Ukraine and the tactical retreats it has already made have invariably dealt a blow to the perception of Russian power that existed before the war.
    • This has strengthened NATO, driving even Sweden and Finland into its arms. Besides, the economic sanctions would leave a long-term hole in Russia’s economy.
    • But a Russia that is bogged down in Ukraine and encircled by NATO need not enhance Europe’s security.
    • As Henry Kissinger said at Davos, Russia had been and would remain an important element in the European state system.

    Conclusion

    The prospects are bleak. There will not be peace in Europe unless either Russia accepts its diminished role and goes into another spell of strategic retreat or Europe and the West in general accommodate Russia’s security concerns. Both look unrealistic as of today.

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  • E-governance

    op-ed snap | Governance | Mains Paper 2: E-Governance

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Use of technology in governance

    Context

    There are several reforms and governance initiatives that have successfully steered India to its current strength.

    Contribution of Digital India program

    • A report carding of Digital India’s performance shows impressive progress.
    • Thus far, the government has transferred more than Rs 17 lakh crore through DBT while saving Rs 2.2 lakh crore.
    • Today, India has the world’s fastest-growing and most vibrant startup ecosystem with close to 70,000 registered startups and around 100 unicorns, with a unicorn coming up every week.
    • GST regime: Thanks to the most significant reform in indirect taxation through the GST and tax compliance, India has registered its highest ever collections.
    • Revenue increased from Rs 22 lakh crore in FY 21 to Rs 27 lakh crore in FY 22 — a whopping 22 per cent growth.
    • Role in India’s response to pandemic: Digital India played a significant role in India’s response to the pandemic.
    • It ensured that the government could reach people in remote parts of the country.
    • Health, education and other essential services migrated swiftly to the online mode.

    Use of technology for governance amid pandemic

    • Digital India played a significant role in India’s response to the pandemic.
    • It ensured that the government could reach people in remote parts of the country.
    • Health, education and other essential services migrated swiftly to the online mode.
    • It would not be an aberration to say that post-Covid, India emerged as a preeminent nation in the use of technology for governance.

    Conclusion

    The rapid digitalisation of the world along with a new focus on trust in the global supply chains for digital products and services presents tremendous opportunities for India and its youth.  It is now up to all of us to engage in a collective “sabka prayas” to realise New India’s economic potential.

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  • Judicial Reforms

    Digitization of Judiciary

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Lok Adalat

    Mains level: Paper 2- Use of technology by judiciary

    Context

    The Indian judiciary has increasingly started using technology and the change is reflected in the legal profession in general as well.

    Increasing use of digital technology in the judiciary

    • With the digitisation of judicial records and the establishment of e-courts, significant developments had taken place in 2020.
    • Use of technology to better utilise potential: It is imperative that the use of digital technology be discussed to better utilise its potential, particularly in terms of digitisation of court records, e-filing of cases and their virtual hearing, live streaming of court proceedings.

    Background

    • In India, e-governance in the field of administration of justice began in the late 1990s, but it accelerated after the enactment of the Information and Technology Act, 2000.
    • In the year of 2006, e-courts were launched as a part of the National e-Governance Plan (NEGP).

    Digitisation of case files

    • When he was the Chief Justice of Allahabad HC, Justice D Y Chandrachud had conceptualised and initiated the project to digitise approximately one crore case files in one year.
    • Saving of space and preservation of old documents: This was necessary as not only was a large space required to store so many files, it was also becoming difficult to manually preserve the decades-old documents.
    • Traceability: Another purpose was to ensure that these files are traceable electronically as and when required.
    • It has also been observed that cases are adjourned simply because affidavits filed several years ago were not restored with the record or were not traceable.
    • Once the documents are digitised and e-filed by counsels, at least the cases would not get adjourned by the courts on this account.
    • Reducing the risk of missing court records: In State of Uttar Pradesh v. Abhay Raj Singh, it was held by the Supreme Court that if court records go missing and re-construction is not possible, the courts are bound to set aside the conviction.
    • Saving of time: With digitisation, it will take much less time for the lower courts to transmit the records as and when called for.
    • The lawyers benefit because they or their staff are no longer required to visit the reporting sections or other sections of the court to know about the status of their cases.
    • This has been sought to be implemented by the e-Committee of the Supreme Court by issuing directions to ensure that e-filing of cases/petitions by state governments in all matters be made mandatory from January 1, 2022.

    Scope for virtual hearing in certain cases

    • Cases related to matrimonial issues and domestic violence bounced cheques, motor accident compensation referred to mediation centres and lok adalats could be included in the list of cases fit for disposal through the virtual hearing.
    • The hearing of matrimonial cases through video-conferencing was approved by the Supreme Court in the matter of Krishna Veni Nagam v Harish Nagam (2017).
    • The direction was short-lived and a coordinate bench of the Supreme Court in the case of Santhini v Vijaya Venkatesh (2018) referred the matter for reconsideration before a larger bench.
    • Virtual hearings cannot be a substitute for physical court hearings in all cases.
    • However, in appropriate cases and certain categories of cases as identified by the court administration in consultation with the members of the Bar, virtual hearing should be made mandatory.

    Live streaming of cases

    • In 2018, the Supreme Court allowed the live-streaming of cases of constitutional and national importance on the basis of the judgment in Swapnil Tripathi.
    • Step towards transparency: The livestreaming of court proceedings is a step towards ensuring transparency and openness.
    • While several reservations were expressed against it, the Gujarat HC in July 2021 became the first court in the country to livestream its proceedings.
    • Its example was followed by other HCs like Karnataka, Odisha, Madhya Pradesh and Patna.

    Challenges

    • Internet connectivity issues and the need for a well-equipped space where lawyers can conduct their cases are some of the major problems requiring attention.
    • Political will and the support of judges and lawyers are also necessary.
    • Awareness and training: Judges, court staff and lawyers are not well-versed with digital technology and its benefits.
    • The need of the hour is for them to be made aware of these and receive adequate training.

    Conclusion

    Adoption of technology will bring drastic changes in the field of law and will transform the Court system.

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  • Police Reforms – SC directives, NPC, other committees reports

    Criminal justice system

    op-ed snap | Polity | Mains Paper 2: Federalism

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Criminal justice system

    Context

    The key to an improved criminal justice system is quality forensic labs and well-trained staff, not more legislation and harsher punishments.

    About forensic science

    • Forensic science is the application of scientific perspectives and techniques to the legal process, including investigations and courtroom protocol.
    • It is the use of scientific data and procedures specifically for the legal system.
    • There is rigorous procedure involved, including controlled conditions, reliable data collection and the attempt to disprove hypotheses.
    • Methodologies like the autopsy procedures, fingerprinting, testing and matching for poisons, blood spatter analysis, matching guns to bullets fired (ballistics), voice sample matches, handwriting assessments and DNA analysis are all facets of forensic science.

     Inadequate state forensic facilities

    • We have a woefully inadequate number of forensic science laboratories (FSL).
    • There are seven central forensic laboratories in India at Hyderabad, Kolkata, Chandigarh, New Delhi, Guwahati, Bhopal and Pune.
    • Six of these laboratories, barring Delhi, are under the control of the Directorate of Forensic Science Services (DFSS), and its mission is to render high quality and credible forensic services to the justice delivery system.
    • A National Forensic Sciences University was established in Gandhinagar, Gujarat in 2020.
    • The existing National Institute of Criminology and Forensic Science in Delhi has been integrated into this new university.
    • There are 32 state FSLs and about 529 mobile FSL units, of which Delhi has one state FSL and six mobile units.
    • The DNA tests discovered in 1985 are used to identify individuals involved in alleged crimes.
    • In 2017, The Hindu reported that while the United Kingdom completes DNA testing on over 60,000 crimes annually, India with over 13 times the population completes such tests on less than 7,500 cases.
    • The average pendency at each lab is huge.
    • In all states, there were over 50 per cent vacancies in personnel at their facilities.

    Way forward

    • More investment: We certainly need more investment in the establishment of FSL laboratories, the training and appointment of personnel adept at forensic methodologies and reforms within our police to establish a trained and skilled detective cadre tasked with solving complex and heinous crimes.
    • Quality training and accreditation: There is a desperate need for good quality training facilities, standards of accreditation and continuous education programmes for our forensic experts.

    Conclusion

    It is not more legislation and harsher punishments that will solve crimes, but well-trained forensic staff plying their craft in good quality laboratories that will aid our criminal justice system.

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  • Goods and Services Tax (GST)

    GST collections touched a record high of Rs 1.67 lakh crore in April.

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GST collection

    Mains level: Paper 3- Increased GST collection

    Context

    There has been a remarkable upswing in GST collections in recent months. Collections touched a record high of Rs 1.67 lakh crore in April.

    GST

    GST Interstate Model Example

    What are the reasons for increased collection?

    • 1] Inflation: First, the sharp rise in inflation has played a significant role.
    • Notwithstanding concerns over the unevenness of the economic recovery, in nominal terms, the economy grew by 19.4 per cent in 2021-22 as per the second advance estimates.
    • Deflating GST collection suggests that a large part of the recent increase in collections is driven by rising prices.
    • 2] Higher imports: Part of the overall increase in collections can be traced to higher imports.
    • Higher buoyancy: Even if one is to exclude the revenue accruing from imports, the rise in GST collections has outstripped GDP growth, indicating higher buoyancy.
    • 3] Tightening of the rules: In order to improve compliance levels, the GST Council has been tweaking the rules to tighten the system.
    • Returns filed have gone up, while the number of non-filers and those who delay filing have fallen.
    • Alongside, the administration has also taken steps to tackle the menace of fake invoices by placing restrictions on the quantum of input tax credit that can be used to pay of tax obligations.
    • The introduction of e-invoicing has also played a role.
    • Until recently, this was being implemented for firms with a turnover of more than Rs 50 crore.
    • From April, this process has been extended to firms above Rs 20 crore.
    • The incremental gains from bringing smaller firms into its ambit, while consequential, are unlikely to be of the same order.
    • 4] Industrial activity:  The higher collections in April 2022 seem to be led by increase in industrial activity. This is borne by strong growth in collections in states such as Maharashtra, Karnataka and Odisha which house lot of industries. Relatively tepid growth in more populous states such as Bihar (-2.47 per cent), West Bengal (7.80 per cent) and Jharkhand (4.86 per cent) shows that the GST collections was not propelled by revival in private consumption.
    •  The real challenge lies in improving compliance levels across the entire spectrum of industries where inputs/raw materials are sourced largely from the informal sector.
    • 5] Changing the structure of the economy: The formalisation of firms, the growing concentration of economic power in the hands of a few, imply that for the same level of output, the tax paid will be higher.

    Suggestion

    • Increase tax rate: Around two-fifths of the taxable value (or turnover) falls under the 18 per cent slab as per research by some analysts.
    • This implies that simply merging the 12 per cent and the 18 per cent slab as some have been suggesting would lead to a revenue loss.
    • Before opting for such adjustments, the GST Council must first ascertain the potential revenue (net of cess and refunds) at varying levels of compliance, tax rates and exemptions afforded.
    • Now, as per some estimates presented to the 15th Finance Commission, with existing exemptions in place, the current tax regime should ideally yield revenues equivalent to 8.23 per cent of GDP.
    •  In another scenario, even if existing exemptions are kept in place, and if a single rate of 14 per cent is levied, then collections should rise to 8.93 per cent.

    Conclusion

    Considering the current economic situation, now may not be an opportune moment to raise taxes. But there is no getting around it. Both the Centre and the states need to work towards this.

     

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  • Important Judgements In News

    Why transfer of case to district judge by Supreme Court sends the wrong signal

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Places of Worship (Special Provisions) Act, 1991

    Mains level: Paper 2- Lower judiciary

    Context

    The Supreme Court order of May 20, transferring the suit on the Gyanvapi Masjid dispute from the civil judge (senior division) Varanasi to the district judge casts aspersion, though unintended, on the competence of civil judges in general.

    Background

    • The matter had reached the Supreme Court on a petition filed by the Mosque Management Committee, which challenged the civil judge’s orders.
    • The order permitted inspection, survey, and videography of the mosque’s complex to collect evidence about the alleged existence of idols of Hindu deities inside the mosque, which is adjacent to the Kashi Vishwanath Temple.
    • The Mosque Management Committee had filed an application before the civil judge seeking the rejection of the plaint on the ground that it was barred by the Places of Worship (Special Provisions) Act, 1991.
    • Places of Worship (Special Provisions) Act, 1991 prohibits individuals and groups of people from converting, in full or in part, a place of worship of any religious denomination into a place of worship of a different religious denomination, or even a different segment of the same religious denomination.
    • It was argued before the SC that given the said Act, the suit was liable to be rejected at the threshold as the civil judge had no jurisdiction to entertain the same, much less to pass the aforesaid interim orders.
    • The SC has not found any fault with the order of the civil judge, though there is also a view that it was mandatory on the part of the civil judge to have first passed an order on whether he had the jurisdiction to entertain the suit.
    • However, it appears that in the SC’s view, this was not a serious infraction.
    • So, in a way, the SC has affirmed the orders of the civil judge.
    • The civil court had territorial and pecuniary jurisdiction to deal with the matter.
    • The question that arises is: Why has the Supreme Court transferred the matter to the court of the district judge?

    Issues with the SC transferring the case to the district judge

    • The SC has seemingly declared civil judges to be not competent to decide a matter alleged to be complex.
    • When the Civil Procedure Code, the High Court Rules and Orders invest a civil judge with jurisdiction, why take it away merely on the plea that the matter is complex?
    • Unhealthy precedent: Fransfer of the case to the district judge has set an unhealthy precedent and will have a demoralising effect on the subordinate judiciary.
    • In the recent past, many lower-level judicial officers have passed outstanding orders in matters concerning the liberties of the citizens, which are under threat as never before.
    • The subordinate judiciary provides the foundation of our judicial system.

    Conclusion

    Supreme Court order inadvertently casts aspersions on competence of subordinate judiciary. District court should not be weighed down by SC observation.

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  • Goods and Services Tax (GST)

    Supreme Court’s ruling on GST deepens the churn in the tax regime

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Implications of Supreme Court's ruling for GST regime

    Context

    Last week, the Supreme Court ruled that the decisions taken by the GST Council are merely recommendations with “persuasive value” and are not binding.

    GST as a advisory body

    • The court has rejected the Centre’s contention that the entire structure of GST would crumble if the Council’s decisions were not treated as enforceable.
    • In some ways, the verdict states the obvious.
    • Article 246-A inserted after the 122nd constitutional amendment states, “Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every state, have the power to make laws with respect to the GST imposed by the Union or by such state.”
    • Thus, the power to levy the central GST (CGST) vests with Parliament, the power to levy state GST (SGST) vests with state legislatures and Parliament has exclusive power to make laws with respect to the GST on items that are part of inter-state trade or commerce.
    •  Thus, the GST Council is only an advisory body and the actual decisions regarding model GST levies, principles of levy, apportionment of GST levied on inter-state supplies, principles relating to place of supply, exemptions and rate structure and any special provisions will have to be taken by either Parliament in the case of CGST and IGST or the states in the case of SGST.
    • In effect, decisions on the structure and operation of the tax can be made by the Centre and individual states without discussion and deliberation in the Council and both can ignore any recommendation made by the Council.
    • The judgment reiterates that the sovereign right to levy the tax still exists with the Union and state governments and it is for them to consider the recommendations of the Council.
    • The chance of having a harmonised GST and reforms in the tax regime will crucially depend upon continued negotiation and bargaining between the Union and states.
    • Intergovernmental cooperation has been kept alive to ensure a harmonised GST and unless both the Centre and the states see the gains, reforms will be hard to come by and if the Centre desires the reforms more than the states, it will have to ensure a “buy in” from the states to agree for the reform.

    Implications of the judgement

    • Given that the GST Council has been declared as only an advisory body with a persuasive value, what happens to the dream of having a harmonised one nation, one tax, if a state or a group of states decides to deviate?
    • But the judgment paves the way for more intensive bargaining and negotiations, placing states on an equal footing with the Centre in taking decisions on the structure and operations of the tax.
    • At present, decisions get approved in the GST Council when passed by a majority of three-fourths of the weighted votes of the members present and voting, with the Centre having one-third weight and individual states (and UTs) having an equal share of the remaining two-thirds weight.
    • However, in the past, all decisions in the Council have been taken by consensus (except in the case of determining the rate on lotteries), and the Supreme Court decision reinforces this convention.
    • The immediate impact of this will be bargaining by states for extending the period of compensation for the loss of revenue.
    •  As the five-year period of compensation gets over at the end of June, this decision will now help the states to bargain hard for the extension.

    Way forward

    •  Though the period of collecting compensation cess has been extended till March 2026 to meet the interest and repayment requirements of the funds borrowed from the RBI to meet the compensation requirements, the lasting solution lies in increasing the revenue productivity of the tax by pruning the list of exempted items, rationalising the rates and taking administrative measures.
    • These reforms will require strengthening the cooperative spirit.

    Conclusion

    This has come at a time when reforms have to be set in motion and hopefully, the Court’s decision will strengthen the cooperative spirit in reforming the domestic consumption tax system in the country.

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  • Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

    The message from the government’s wheat export ban

    op-ed snap | Agriculture | Mains Paper 3: Agriculture and related issues,Issues Related To Farm Subsidies & Msp

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Challenges facing wheat economy in India

    Context

    The ban on the export of wheat was not unexpected. The rather ambivalent approach to agriculture comes out clearly with this move.

    Understanding how this ban has come about

    • We are not comfortable with market forces operating in agriculture.
    • Nor are we quite sure whether we want the farmer to get a better price or the consumer to pay less.
    • Governments spend a lot of money in the form of subsidies to ensure farmers are enthused to produce more wheat.
    • The Centre keeps increasing the MSP for this purpose and states often pay a bonus for procurement.
    • There are political reasons too as the farmer lobby needs to be placated.
    •  There are political reasons too as the farmer lobby needs to be placated.
    • We have been taking credit for the production of wheat and every year we set a new record.
    • This year, the Ministry announced that wheat production will touch a record of 111 million tonnes, which has recently been revised downwards.
    • With the war, conditions have changed. Russia and Ukraine are large producers of wheat and their supply to world markets has been cut off due to sanctions and supply chain disruptions.
    • With supplies interrupted, there is an opportunity for other surplus nations to step in.
    • But the disruption has caused world prices to rise significantly.

    Opportunity for India

    • The World Bank data indicates that the price of US (soft red winter) wheat has gone up from $328/tonne in December to $672/tonne while US (hard red winter) wheat is up from $377 to $496/tonne.
    • Countries that produce abundant wheat now have a chance to leverage this opportunity to export.
    • However, in case of India it does appear that production will be lower than expected.
    • Low wheat stock: The government has also not been able to procure wheat as farmers are no longer selling at MSP (which is at Rs 2,015/quintal) as they are getting higher prices in mandis.
    • As of May 10, procurement was just 18 million tonnes against 43 million tonnes last year.
    • This is a significant fall.
    • But stocks with the Centre and other state agencies are 30.3 million tonnes, way above the buffer norms of 27.6 million tonnes.
    • The ban on wheat exports is because of this.

    Two constraints on the wheat economy

    • In 2007 and again in 2021, the government banned futures trading in wheat on grounds that it led to speculative pressure on prices even though the quantity traded and the open interest were minuscule.
    • At that time, it was a decline in expected output which triggered this action.
    • It does look like the wheat economy will continue to operate within two constraints that have become barriers to commercialisation.
    • MSP and government procurement: The first is MSP and government procurement, which feeds into the public distribution system.
    • Arhatiya system: The second is the arhatiya system of trading where middlemen have come in the way of any reform.

    Suggestions

    • Abolish MSP and procurement system: The MSP and procurement system needs to be dismantled.
    • Cash transfers: As the government has successfully expanded both the Aadhaar and Jan Dhan programmes, there should be simple cash transfers to beneficiaries.
    • Buffer stocks can be held to ease distress during a crisis, but government involvement should stop there.
    • Procuring unlimited quantities of wheat and keeping huge stocks has distorted the wheat matrix.
    • The mandi system too needs to be revisited and alternatives have to be made available so that farmers can choose the point of sale.

    Conclusion

    We have been talking about being a part of global supply chains to augment value addition and accelerate growth. But when it comes to agriculture it is a blow-hot blow-cold approach. This not only affects our credibility but also sends confusing signals to producers as to what is the best way out for them.

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