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Type: op-ed snap

  • Tax Reforms

    Reforming tax system

    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- Tax reforms

    The article discusses two recent measures announced by the government to bring in the transparency in the tax system.

    Issue of lower tax collection and way out

    • An economic contraction this year will severely impact tax collections.
    • Changing tax rates or the tax base in response is difficult and a hurried approach can have wider consequences.
    • So, the only tool available is to urge voluntary compliance.
    • Compliance is achieved through a fine balance between enforcement and encouragement.
    • Despite enforcement-driven measures in the past the taxpaying population has remained at only 6 per cent.
    • Thus, the only way to boost collections is to build trust between the administration and the taxpayer.

    Relation between complexity of system and compliance

    • A taxpayer has to interact with the tax system at numerous instances.
    • While interacting, if the taxpayer perceives the system to be complex, such perception affects compliance.
    • Perceived complexity can discourage individuals from filing returns.
    • This could reflect simply in the difference between the number of taxpayers and the returns filed: which is around 20 million.
    • Such behaviour is bound to impact tax collection.

    Recent government measures to bring transparency

    1) New taxpayer’s charter with some new features

    • The charter is a document that lists a taxpayer’s rights and obligations.
    • A taxpayer’s charter is often perceived as a means to build taxpayer’s trust.
    • The rights and obligations mentioned in India’s new charter are in line with global practices.
    • There are 3 interesting additions in the new charter: 1) commitment to reducing compliance costs 2) holding its authorities accountable 3) publishing a periodic report of service standards.
    • A tax ombudsman can ensure that some of these standards are met, however, in 2019, the cabinet approved the abolition of the quasi-judicial post.

    2) Faceless assessment

    • This relates to the frequent complaint of taxpayers about corruption and delay.
    • To end personal interface, e-assessment was introduced in 2019.
    • Developing this idea further, faceless assessment now seeks to further automate the case selection and the distribution function of the assessing officer.
    • The intent is to divest and distribute the functions of a single assessing officer so that assessment is carried out in a fair manner.

    Consider the question “What are the factors responsible for low tax compliance in India? What are the steps taken by the government to increase compliance?

    Conclusion

    If the commitment to a fair and impartial system and a time-bound resolution of matters is to be met, the new processes, with reviews and anonymity, must ensure efficiency in case selection and consistency in assessment.

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  • Civil Services Reforms

    Our civil services need a reboot

    op-ed snap | Governance | Mains Paper 2: Civil Service

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Mission Karmayogi

    Mains level: Paper 2- Mission Karmayogi

    The Mission Karmayogi seeks to overhaul the bureaucracy in the country. The article discusses its aims and the challenges it could face.

    Context

    • The Union cabinet’s approval of Mission Karmayogi has raised the hope of a national bureaucracy that is adequately responsive to the country’s needs.

    Need for the overhaul

    • The system’s focus needs to be role- rather than rule-specific,
    • Coordination should prevail over battles for control, and IAS officers ought to be enablers instead of red-tape wrappers. 
    • There has been a near consensus in the country that our system of policy implementation needs an overhaul.

    What  is Mission Karmayogi

    • It is an upskilling initiative for government officials that aims to fix and galvanize India’s administration.
    • As envisaged, the Karmayogi training mechanism will cover an estimated 4.6 million officials at all levels.
    • Due to the scale of the exercise elaborate multi-tier command structure is expected to be put in place for it.
    • At its apex would be a Human Resource Council, headed by the Prime Minister.
    • Human Resource Council shall approve and monitor various skill-enhancing programmes as well as review the performance of employees routinely.

    Challenges

    • Given the way our bureaucracy has operated for decades, Mission Karmayogi is likely to prove disruptive.
    • The idea of being subject to continuous evaluation by a central authority could unsettle some officers.
    • There has been some disquiet within IAS ranks over the Centre’s lateral induction of people for senior roles, perhaps the new mission will resolve such disgruntlement.

    Conclusion

    Gentralized supervision of such large numbers does not promise to be easy. Globally, centralization has been observed to militate against diversity of thought. And that’s vital to the governance of a country like India.

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    Scrutinising government’s work in limited monsoon session

    op-ed snap | Polity | Mains Paper 2: Parliament & State Legislatures

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Role and accountability of legislature

    Mains level: Paper 2- Role of key organs of democracy during pandemic

    The article analyses the impact of pandemic on the functioning legislatures and issues its implications.

    Context

    • Due to coronavirus pandemic, several States have held very short sessions in which they ratified a number of ordinances and hardly questioned any executive action over the last few months.

    Role of Parliament and Court

    • The government has the mandate to take decisions and perform various public tasks.
    • Government in turn is accountable to the legislature which can question it, and, as an extreme step, even replace it.
    • The legislature is accountable to citizens through regular elections.
    • Finally, constitutional courts are expected to ensure that all actions are made within the boundaries of the Constitution and laws made by the legislature.

    Dilution of the role of Parliament in  India

    • Indian Parliament has allowed its role to be diluted over the last few decades.
    • It has not questioned and monitored the activity of the executive.
    • Comparison with British Parliament: The United Kingdom’s joint parliamentary committee on human rights examined the proposals of a contact tracing app.
    • The committee recommended that an app could be used only if there was specific primary legislation to enable it. 
    •  India, in contrast, rolled out Aarogya Setu through executive decision, and has created a grey zone on whether it is mandatory or not.
    • Parliament should recover lost ground by fulfilling its constitutionally mandated role.

    Lack of parliamentary oversight during pandemic

    • Parliament will be meeting after 175 days.
    • 175 days’ is the longest gap without intervening general elections and just short of the six-month constitutional limit.
    • During the pandemic, over 900 central and nearly 6,000 State government notifications have been issued
    • Parliamentary committees did not meet for about four months.
    • This is unlike many other countries where both the plenary and committees have adopted technology to enable members to participate from home.

    Judicial intervention in policy issues

    • The lack of parliamentary oversight has been compounded by judicial intervention in many policy issues.
    •  For example, the government’s actions related to the lockdown should have been questioned by Parliament.
    • However, this was taken to the Supreme Court, which is not equipped and mandated to balance policy options.
    • Directions of the Court have to be followed which removes flexibility needed to tackle evolving issues with implementation.
    • Consider another case, Court decided to limit the period in which telecom companies have to pay their dues to the government, and overruled a cabinet decision.
    • This is a policy matter that balances interests of telecom companies, consumers and banks.
    • This issue is best judged by the government with oversight by Parliament.
    • And court should step in if there is an illegality.

    Way forward

    • Several events have taken place over the last six months that need thorough discussion.
    • This includes ways to tackle the spread of the coronavirus, economic growth which has had a sharp fall in the first quarter of this fiscal year.
    • This has far-reaching implications for creating jobs, stability of the banking system, and government finances.
    • The government is likely to bring in a supplementary budget; indeed, a fresh look at the Union Budget may be required given the changes in basic assumptions since January.
    • The situation at the China border also needs to be discussed.

    Consider the question “Anlyse the impact of pandemic on the key organs of the democracy.”

    Conclusion

    Parliamentarians have a duty towards Indian citizens to fulfil their role in scrutinising the work of the government and guiding policy. Despite the curtailed session and the constraints due to the coronavirus, they should make the best of the limited time to do so. They need to wrest back their rightful role in our democracy.

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  • Women empowerment issues – Jobs,Reservation and education

    Examining the legislative error of disentitling daughters

    op-ed snap | Governance | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Hindu Succession Act 1956 and amendments

    Mains level: Paper 2- The Supreme Court judgement making daughters coparcener in her own right

    The article highlights the importance of the latest Supreme Court Judgement making daughter coparcener in own right by birth removing the conditions laid down in the previous judgement.

    Background

    • In Vineeta Sharma v. Rakesh Sharma (2020), the Supreme Court held that a coparcener’s daughter would become a coparcener in her own right by birth.

    Amendment in 2005 and related SC judgement

    • There is a difference between rights conferred by the Hindu Succession Act of 1956 and the amendment to that act in 2005.
    • In 1956 Act, equal right of succession at par with a son was given to a daughter, but only after the demise of the father or mother.
    • The 2005 amendment gave the right to property to a daughter in a joint Hindu family during the lifetime of the father.
    • In Prakash v. Phulavati 2005, the Supreme Court decided on the prospectivity or retrospectivity of the law creating coparcenary rights in favour of daughters.
    • It created a condition that the rights under the amendment are applicable only to living daughters of living coparceners as on September 9, 2005; however, it gave no reason as to why this was chosen as a condition.
    • The status of a daughter to be subject to her father being alive is apparently a mistake.
    • The death of an individual should not determine the rights of their heirs.
    • If any right had accrued in the daughter’s favour by a legislation, the same can’t be disturbed by death of her father.

    What the SC said in latest judgement

    • In the present judgment, Vineeta Sharma v. Rakesh Sharma , the court rightly held that as laid down in Section 6 (1) (a), daughter is to be a coparcener by birth; so there is no question of being prospective or retrospective.
    • It is the physical status that matters and should not be linked to a date.
    • Even in the case of unregistered partition deeds executed before December 20, 2004, the court has opened a new window for daughters.
    • Daughters can claim a right even in an unregistered partition deed which has not been proved conclusively.

    Conclusion

    There is a need to examine all the existing laws and wherever discriminatory practices exist, they need to be amended appropriately.

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  • Digital India Initiatives

    Issues with the Gopalakrishnan Committee Report

    op-ed snap | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Personal data and non-personal data

    Mains level: Paper 3- Making open data-society by sharing making open the data collected by the government

    The article highlights the importance of non-personal data collected by the government and lack of any reference to it in the Gopalakrishnan Committee report.

    Background

    • The Committee of Experts on the Non-Personal Data Governance Framework headed by K Gopalakrishnan has recommended making privately held non-personal data “open”.
    •  This has raised concerns about state interference in the private data ecoystem.

    Importance of data collected by government agencies

    • The report is a missed opportunity to address the governance frameworks around data created by government agencies.
    • Some of the most important non-personal data sets are held by the government, or result from taxpayer funding.
    • Such data can be useful in either framing public policy or creating and providing new services.

    Why government data should be open to citizens: 5 Reasons

    • First, the state should be transparent about information that it has. This will improve accountability.
    • Second, if taxpayer money has funded any of the data sets, then it is an obligation of the state to return the fruits of that funding to the taxpayer.
    • Third, by permitting the reuse of government data sets, we avoid the need for duplication.
    • Fourth, government data sets, curated according to publicly verified standards, can lead to increased confidence in data quality and increased usage.
    • Finally, free flow of information can have beneficial effects on society in general.

    Government policies promoting openness of data

    • The Right to Information (RTI) Act, 2005, mandates the disclosure of government data on a suo moto basis.
    • One of the nine pillars of the Digital India Policy is “information for all”.
    • The National Data Sharing and Accessibility Policy (NDSAP), 2012 requires all non-sensitive information held by public authorities to be made publicly accessible in machine readable formats (subject to conditions).
    • The government has also set up an Open Government Data Platform to provide open access to data sets held by ministries and other agencies of the government.
    • Various States have also either created their own data portals or have provided data sets to the Open Government Data Platform.

    Challenges in making the data open to society

    • There are two reasons for our failure to create an open data-based society.
    • The first is lack of clarity in some of the provisions of the NDSAP or the relevant implementation guidelines.
    • The second is the inability to enforce guidelines appropriately.
    • Data sets released by governments are often inconsistent, incomplete, outdated, published in non-machine readable or inconsistent formats, include duplicates, and lack quality (or any) metadata, thereby reducing re-usability.

    Issues with Gopalakrishnana Committee Report

    • The Gopalakrishnan Committee could have evaluated what is going wrong with existing policies and practice pertaining to government data.
    • The report is a missed opportunity to address the governance frameworks around non-personal data sets in a country created by government agencies, or those resulting from taxpayer money.
    • The report largely focuses on the dangers posed by data collection by private sector entities.
    • This has raised concerns about state interference in the private data ecoystem.
    • Many of the concerns that should be addressed in the report that are central to the governance of the data ecosystem have remained in the background.
    • For instance, India’s cybersecurity framework continues to be inadequate, while even the Justice B.N. Srikrishna Committee report of 2018 highlighted the need to restrict the growing power of the state to carry out surveillance.

    Consider the question “What are the key recommendation made by the Gopalakrishnan Committee for the regulation of non-personal data? What are the shortcomings in of the report in your opinion?”

    Conclusion

    Since data governance is a relatively new concept in India, the government would be better served in taking an incremental approach to any perceived problems. This should begin with reforming how the government itself deals with citizens’ data.

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  • Higher Education – RUSA, NIRF, HEFA, etc.

    Economics of education

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Financial challenges education sector faces in India

    The article delineates the challenges academic institutions in India faces in the wake of Covid disruption and suggests some measures to deal with the challenges.

    Context

    Disruption in the wake of pandemic raised the spectre of educational institutions shuttering their doors completely or taking unprecedented steps that have invariably affected jobs and livelihoods.

    Economics of the academics

    • Economics has always been a part of academics; it is only in the present circumstances that it has become all the more apparent.
    • Management in private institutions, is going to meet demands on the one hand and availability of resources on the other.
    • One may call this new phenomenon “acadonomics”.
    • “Acadonomics” would imply a careful allocation of resources keeping in mind the transient nature of the issue of how long it is going to take to come back to the steady state of affairs that it once was.
    • ‘Acadonomics’ will also involve seeing the economics of moving on to an online mode of the teaching-learning process.

    Comparison with the West

    • The academic choices are not the same for all countries across the world.
    • In the United States the elite private and state subsidised universities have endowments that can be used for a range of academic activities.
    • Top 10 of the U.S. have a cushion of anywhere between $10 billion to $40 billion.
    • By contrast, private academic institutions in India do not have any such buffers.
    • None of the institutions in India possesses big corpuses from alumni or industry.
    • Their survival, for the most part, is on the annual income that comes from tuition and the assortment of other fees collected.

    Private education in India

    • Private institutions in India are hardly in a position to meet an eventuality such as COVID-19.
    •  In an educational set-up in India, nothing can be reduced — the norms cannot be lowered nor can the infrastructure be dismantled.
    •  For the most part, the fixed and operational costs remain the same, and infrastructure once created cannot be shrunk.
    • The downside to self-financed institutions is that in the time of the pandemic and loss of jobs, students plead inability to pay the requisite fee.
    • Which places additional burden on the management which feels already stretched because of existing commitments.

    Dual mode of learning and issues

    • 1) Cost for persisting with a dual mode of the teaching-learning process is going to be quite prohibitive for the next few years.
    • The scaling of operations that would include the dual modes of online and offline is going to be expensive.
    • 2) The online teaching mode brings with it increased costs of IT infrastructure such as network bandwidth, servers, cloud resources and software licensing fees.
    • 3) Online teaching means new hiring in the IT sector and increased costs due to engagements with Massive Open Online Courses, or MOOCs, and other online platforms.
    • 4) Online teaching means setting up multiple studios and educational technology centres which translate into investments in high technology.
    • 5) Creation of virtual laboratories across all domains of studies and examination centres, etc. would add to the woes in terms of already depleted finances.
    • 6) Additional funds have to be allocated to train faculty for online teaching.

    Way forward

    • The Centre and State governments should provide soft loans to students to stay with the educational course.
    • Students looking at online instruction would be disinclined to pay the same fee charged for offline instruction.
    • It would seem prudent for the government and regulatory bodies to not interfere in the fee structure, and, for the future, even consider a measure of higher degree of financial autonomy.
    • It is high time institutions in India are allowed to create coffers or corpuses for a rainy day.
    • Educational institutions could come to be treated like any other corporate body, with an allowable small margin of profit.

    Consider the question “What are the challenges faced by the education system in the aftermath of the pandemic. Suggest ways to mitigate the impact.”

    Conclusion

    ‘Acadonomics’ of the future will not only decide the fate of the academic sector in India but also its quality, ranking, research, innovation potential and its collective impact on our country’s economy.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Aiming for wider consumer base and directing public spending accordingly

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Widening consumer base to revive growth

    The article suggests the widening of consumer base rather than increasing consumption. To augment that, the government should also direct the spending towards such sectors which would help in broadening of the base.

    Prescription for long term growth: Broadening the consumer base

    • India entered the pandemic with declining growth and limited scope for a conventional and large fiscal stimulus.
    • The NSS 68th round consumption survey indicates that in urban India, the top 20 per cent of the population accounted for nearly 55 per cent of discretionary consumption and 45 per cent of all consumption.
    •  The narrow consumption base coupled with uncertainty over the demographic dividend could belie India’s long-term investment attractiveness.
    • With or without the pandemic, the prescriptions for long-term growth remain the same — broaden the consumer base.
    • This broadening of the consumer base should happen through empowering the low and middle-income consumers.

    Why can’t the government just spend to revive growth

    • 1) Temporary incomes coupled with job/income uncertainty will induce precautionary savings without any impact on growth.
    • 2) With revenues declined, funding of additional expenditure is through higher borrowings.
    • Any incremental debt should be seen in the context of future investments being hampered due to current consumption.
    • India’s public debt/GDP will likely reach around 85 per cent and the consolidated gross fiscal deficit to GDP ratio could be around 12.5 per cent this year. 

    Way forward

    • India needs to broaden its consumer base beyond the top 10-20 per cent of the population to improve long-term growth prospects.
    • To achieve this we will need well-paid employment for the bottom and middle segments.
    • The “safe” group of India’s workforce is extremely small.
    • The PLFS 2018-19 report places around 24 per cent of the workforce in the regular wage/salary category.
    • Within this segment, around 40 per cent do not have a written contract, paid leaves, or security while 70 per cent do not have any written contract.
    • These sharp skews in consumption and labour become a substantial risk for a consumption-led growth in the aftermath of a crisis.
    • The PLFS 2018-19 report indicates that around 50 per cent of the rural non-agriculture workforce.
    • 35 per cent of the urban workforce is engaged in the construction and manufacturing sectors.
    • The rebuild and recover phase should aim for a wider consumer base with infrastructure and manufacturing as the two pillars.
    • To make manufacturing easier, the focus should be on labour reforms, fewer/quicker approvals, reducing the compliance burden, and promoting export-oriented sectors.
    • Policies should not become too inward-looking such that export promotion becomes difficult.

    Directing public spending and policies appropriately

    • Most public spending should be directed towards roads, railways, infrastructure, healthcare and educational facilities.
    • To promote infrastructure creation along with private sector participation, the government needs to charge an economic price for goods and services such as power, irrigation, and public utilities.
    • Establish the rule of law with minimal interference in pricing, streamline processes for quick approvals and ensure timely payments to private operators.
    • The government should also signal its vision along with a financing strategy through sharper expenditure management, enhanced market borrowings, setting up of a Development Financing Institution, and an asset monetisation programme.

    Conclusion

    To achieve economic growth of 7-8 per cent the government needs to start addressing large infrastructure deficit, the weak financial sector, archaic land and labour laws, and the administrative and judicial hurdles.

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  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    Thinking of new recovery path

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Extended producer responsibility

    Mains level: Paper 3- Coupling growth and environmental protection

    Growth and environmental protection are not the polar opposites of each other. The article analyses the issue of balancing the two and using pandemic as an opportunity to evolve novel recovery path.

    Pandemic: opportunity to new recovery path

    • The pandemic presents an opportunity for us to think of a new recovery path, one that can decouple economic growth and environmental degradation.
    • It becomes more important as India sees opportunities on the global call to diversify the supply chain and its internal call for Atmanirbhar Bharat.
    • For that, we need to strengthen our production and manufacturing capabilities.

    Issue of regulatory infrastructure

    • Monitoring and implementing environmental regulations is the biggest challenge we face.
    • Take the municipal solid waste rules.
    • Two decades after the regulations came into effect, their status not in good shape.
    • A comparatively recent regulation, centred around Extended Producer Responsibility, has also posed challenges in monitoring and implementation.
    • In a recent ruling, the judiciary not only ruled against the industry but also blamed officials responsible for implementing the regulations.

    Focus on implementation and monitoring

    •  In the long run, diluting regulatory norms will create more adverse impacts resulting in greater community upsurge.
    • The focus has to be to improve the system’s capabilities to monitor and implement regulatory requirements.
    • There needs to be greater transparency and accountability; there is no dearth of technology to facilitate this.
    • The intention and capacity to take action, rectify and diffuse is critical.
    • The right ecosystem between the industry, community and regulator is crucial.
    • If the three stakeholders remain isolated and get activated only in a crisis, we will not make any progress towards solving the issue.

    Way forward

    • We need to couple growth and environmental protection.
    • Environmental health will be the key enabler of socio-economic growth in the future.
    • Industry needs to realise that it is a part of an ecosystem and not at the centre of it.
    • Communities get impacted, either positively or negatively,  they need to empower themselves through education, so that they are not driven by the agenda of individuals with vested interests.
    • We have a challenge in implementing environmental regulations.
    • The community does not trust that the industry is meeting its compliance requirements, so, the regulatory system’s role is to improve this trust quotient.

    Conclusion

    As we plan our recovery past the pandemic, we have a good chance to create a new normal. We need to align towards a common cause and goals. We should not miss this chance.

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  • Goods and Services Tax (GST)

    GST reforms and compensation issue

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GST

    Mains level: Paper 3- GST compensation issue and reforms needed

    The GST compensation issue raises the need for reform in the system. The article discusses this issue and suggests reform.

    Background

    • Three years ago, the Centre and the States of the Union of India struck a grand bargain resulting in GST.
    • The States gave up their right to collect sales tax and sundry taxes, and the Centre gave up excise and services tax. 

    Issue of compensation

    • Consent of the states was secured by a promise of reimbursing any shortfall in tax revenues for a period of five years.
    • This reimbursement was to be funded by a special cess called the GST compensation cess. 
    • The promised reimbursement was to fill the gap for an assured 14% year on year tax growth for five years.

    Why is the Centre denying GST compensation

    • As the economy battles a pandemic and recession, the tax collection has dropped significantly.
    • At the same time, expenditure needs are sharply higher at the State level.
    • Using an equivalent of the Force Majeure clause in commercial contracts, the Centre is abdicating its responsibility of making up for the shortfall in 14% growth in GST revenues to the states.

    Why Central government is wrong in denying the compensation

    •  1) The States do not have recourse to multiple options that the Centre has.[like sovereign bond or a loan against public sector unit shares from the Reserve Bank of India]
    • 2) The Centre can get loans at lower rates of borrowing from the markets as compared to the States.
    • 3) In terms of aggregate public sector borrowing, it does not matter for the debt markets, nor the rating agencies, whether it is the States or the Centre that is increasing their indebtedness.
    • 4) Fighting this recession through increased fiscal stimulus is basically the job of macroeconomic stabilisation, which is the Centre’s domain.
    • 5) Using the alibi of the COVID-19 pandemic causes a serious dent in the trust built up between the Centre and States.
    • It will weaken the foundation of cooperative federalism.

    Reforms needed

    • GST is a destination-based consumption tax, which must include all goods and services with very few exceptions.
    • That widening of the tax base itself will allow us to go back to the original recommendation of a standard rate of 12%, to be fixed for at least a five-year period.
    • Some extra elbow room for the States’ revenue autonomy could be allowed by States non VATable surcharges on a small list of “sin” goods.
    • In the long term there are many changes in consumption patterns, production configurations and locations, which cannot be anticipated and hence a static concept of Revenue Neutral Rate cannot be reference.
    • The commitment to a low and stable rate is a must.
    • We must recognise the increasing importance of the third tier of government. 
    • After 28 years of the 73rd and 74th Amendments, the local governments do not have the promised transfer of funds, functions and functionaries.
    • Of the 12% GST, 10% should be equally shared between the States and the Centre, and 2% must be earmarked exclusively for the urban and rural local bodies.
    • Fresh approach also calls for an overhaul of the interstate GST and the administration of the e-way bill.

    Consider the question “Discuss the issue related to GST compensation to the States by the Central government. Suggest the measures changes in the GST regime to deal with flaws.”

    Conclusion

    GST is a crucial and long-term structural reform which can address the fiscal needs of the future, strike the right and desired balance to achieve co-operative federalism and also lead to enhanced economic growth. The current design and implementation has failed to deliver on that promise. A new grand bargain is needed.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Despite the messaging, it is still advantage China

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Providing alternative investment destination to China and policy changes in India

    The article examines whether India has been proving a favourable alternative to China or not.

    Is India becoming alternate supply source and investment destination?

    • Despite media reports and strong messaging from Washington, fewer U.S. companies than predicted might quit China.
    • Companies focused on the Chinese domestic market rather than as a base for exports will likely remain, at least for now.
    • Those that do leave may not choose India as a relocation destination.
    • Many U.S. companies with experience working with China are not convinced that India has China’s established industrial base and expertise.
    • They also see other Asian countries as more competitive.

    India’s strengths

    • Democracy: India’s identity as a democratic “un-China” is one of its strongest selling points.
    • Strong IPR: There is no threat of stealing of intellectual property rights.
    • No coercive tactics: Foreign companies in India are not subject to coercive tactics as in China.
    • Institutions: India’s open and vibrant press, an independent judiciary, and other advantages of democratic governance also provide a contrast to China.
    • Domestic market:India’s well-off domestic market also attracts foreign investors.

    Why China is a favoured destination

    • China offers many advantages, such as a manufacturing infrastructure and skill level that allows innovations to move quickly from prototype to product.
    • China’s specialised industrial zones are massive, collocating companies, factories, logistics, and even research and universities.

    Way forward

    1) Focus on the States

    • India can start by focusing development in those Indian States that have already demonstrated the ability to produce and export in key sectors.
    • Foreign capital could also greatly increase infrastructure funds beyond government spending alone.
    • India might also usefully build up new industrial centres with an eye to geography. [for instance-linking the southeast of the country to supply chains in Southeast Asia]

    2) Focus on the policy framework

    • India should take two great steps-
    • 1) Reduce the number of investments needing approval by the Centre.
    • 2)To increase intra-Ministry coordination on foreign direct investment policies.
    • The same coordination could be extended to the appointment of a high-level official or body in the Prime Minister’s Office.
    • This will ensure that all proposed economic policy changes are consistent with the goal of attracting foreign investment.

    Conclusion

    A policy framework that is transparent, predictable, and provides increased consultations with existing and potential foreign company stakeholders before introducing new Indian economic policies, will play a crucial role in determining India’s foreign investment outlook.

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