THE INTERNATIONAL RELATIONS

1. INDIA-ASEAN DIGITAL WORK PLAN 2022

THE CONTEXT: During the second the 2nd ASEAN Digital Ministers (ADGMIN) meeting,India-ASEAN Digital Work Plan 2022 approved by the Union Ministry for Communications.

THE EXPLANATION:

• The ADGMIN is an annual meeting of Telecom Ministers of 10 ASEAN (Association of South-East Asian Nations) countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam and dialogue partner countries – Australia, Canada, China, EU, India, Japan, Republic of Korea, New Zealand, Russia, UK and US.
• The meeting discussed and deliberated various matters relevant to strengthening regional digital cooperation in the spirit of digital inclusion and integration.

About the Work Plan:

• The work plan includes system for combating the use of stolen and counterfeit mobile handsets, WiFi Access network interface for nationwide public internet, the capacity building and knowledge sharing in emerging areas in the field of Information and Communication Technologies such as Internet of Things (IoT), 5G, Advanced Satellite Communication, Cyber Forensics, etc. Communication Technologies such as Internet of Things (IoT), 5G, Advanced Satellite Communication, Cyber Forensics, etc. The ongoing and proposed projects in ICTs, will strengthen collaboration between India and ASEAN by leveraging complementary strengths of each other.

THE ENVIRONMENT & ECOLOGY

2. PARASITIC FLOWERING PLANT DISCOVERED FROM NICOBAR ISLANDS

THE CONTEXT: A new genus of a parasitic flowering plant has recently been discovered from the Nicobar group of islands. The genus Septemeranthus grows on the plant species Horsfieldia glabra (Blume) Warb.

THE EXPLANATION:

• It is endemic only to the Nicobar group of islands.
• The genus Septemeranthushas a distinct vegetative morphology, inflorescence architecture and floral characters. The leaves of the plant are heart-shaped with a very long tip and the ovary,fruit and seeds are ‘urceolate’ (earthen pot-shaped).
• In addition to Septemeranthus, four other genera on non-parasitic plants, Nicobariodendron (Hippocrateaceae), Pseudodiplospora (Rubiaceae), Pubistylis (Rubiaceae),  Sphyranthera, (Euphorbiaceae) have also been discovered earlier from Nicobar group of islands, highlighting the ecological significance of the region.
• The newly discovered plant that derives nutrients from its hosts has green leaves capable of photosynthesis.

THE ECONOMIC DEVELOPMENT

3. THE DESIGN-LINKED INCENTIVE (DLI) SCHEME

THE CONTEXT: Recently, India has invited applications from 100 domestic companies, startups and small and medium enterprises to become a part of the design-linked incentive (DLI) scheme.  Along with it the IT ministry has sought proposals from academia, start-ups and MSMEs to train 85,000 qualified engineers on semiconductor design and manufacturing.

What is the DLI scheme?

• The DLI scheme aims to provide financial and infrastructural support to companies setting up fabs or semiconductor making plants in India.
• It will offer fiscal support of up to 50% of the total cost to eligible participants who can set up these fabs in the country. It will also offer fiscal support of 30% of the capital expenditure to participants for building compound semiconductors, silicon photonics and sensors fabrication plants in India, under this scheme.
• According to MeitY,an incentive of 4% to 6% on net sales will be provided for five years to companies of semiconductor design for integrated circuits, chipsets, system on chips, systems and IP cores. It is expected to facilitate the growth of at least 20 such companies which can achieve a turnover of more than ₹1500 crore in the coming five years.

GLOBAL PLAYERS:

• According to estimates by NXP semiconductors. A small number of chipmakers based largely in Taiwan and South Korea produce up to 70% of the world’s semiconductors.
• The EU has also announced a public-private semiconductor alliance with the goal of increasing Europe’s chip production share to 20% by 2030.

CHALLENGES FOR INDIA:

• Setting up fabs is capital intensive and needs investment in the range of $5 billion to $10 billion.
• Lack of investments and supportive government policies are some of the challenges in India.
• Crucial infrastructure like connectivity to airports, seaports and availability of gallons of pure water are the other challenges to set up fabs in India.

HOW THIS SCHEME BENEFITS ?

• The DLI scheme aims to attract existing and global players as it will support their expenditures related to design software, IP rights, development, testing and deployment.
• It will boost the domestic companies, start-ups, and MSMEs to develop and deploy the semiconductor design. It will also help global investors to choose India as their preferred investment destination.
• The firm reckons that this is a big step to bring India on the world map for semiconductor manufacturing.

According to experts, the Design Linked Incentive (DLI) scheme along with the recent Production-Linked Incentive (PLI) scheme have become crucial in shaping India as an efficient, equitable, and resilient design and manufacturing hub.

4. WHAT IS REVERSE REPO NORMALISATION?

THE CONTEXT: State Bank of India’s economic research team believes the stage is set for a reverse repo normalization.

THE EXPLANATION:

• The RBI’s revised liquidity management framework (February 2020) has retained the width of the liquidity management corridor at 50 basis points – the reverse repo rate being 25 basis points below the repo rate (of 4 per cent) and the Marginal Standing Facility rate 25 basis points above the repo rate.
• The purpose of the aforementioned cut in reverse repo rate was to make it relatively unattractive for banks to passively deposit funds with the Reserve Bank and use these funds for on-lending to productive sectors of the economy.

• This process of normalisation, which is aimed at curbing inflation, will not only reduce excess liquidity but also result in higher interest rates across the board in the Indian economy — thus reducing the demand for money among consumers (since it would make more sense to just keep the money in the bank) and making it costlier for businesses to borrow fresh loans.

5. INDIA-UAE VC FUND SET UP TO BOOST START-UP ECOSYSTEM

THE CONTEXT: A $150-millionIndia-UAE venture capital fund to fuel growth of start-ups in India and the UAE was launched at EXPO2020 Dubai.

THE EXPLANATION:

• The VC Fund is a first-of-its-kind to be set up in the UAE to source, invest and nurture promising start-ups through an accelerator to fuel the growth of India-UAE start-ups. It will be funded by investors across UAE, India and wider GCC countries.
• The Fund will also act as a catalyst to provide a process for developing early-stage start-ups in India and the UAE into viable global ventures and making them attain the unicorn level. It will target to invest in a minimum of 50 demonstrated and validated start-ups based in India and the UAE over a period of 5 years, turning 10 unicorns by 2025.

What is meant by Venture Capital?

• Venture Capital is a financing tool for companies and an investment vehicle for wealthy individuals and institutional investors. Wealthy investors like to invest their capital in startups with a long-term growth perspective.
• This capital is called venture capital and the investors are called venture capitalists, in other words, it is a way for companies to receive money in the short term and for investors to grow wealth in the long term.

THE SCIENCE AND TECHNOLOGY

6. THE MOLECULAR BIOLOGY OF ASAFOETIDA

THE CONTEXT: In 2020, the scientists from the Council of Scientific and Industrial Research (CSIR) — Institute of Himalayan Bioresource Technology (IHBT) based in Palampur, Himachal Pradesh, announced that they had planted 800 saplings of Ferulaasafoetida in the cold desert region of Lahaul and Spiti.

THE EXPLANATION:

• ASAFOETIDA (hing in Hindi, perungayam in Tamil): An integral part of Indian cuisine and natural medicine, asafoetida is extracted from the fleshy roots of the perennial ferula (part of the celery family) as an oleo-gum resin. It is also known colloquially as “devil’s dung” in English.
• Cold desert climatic conditions in the Lahaul–Spiti area in Himachal Pradesh are remarkably similar to those in the Iran and Afghanistan. Efforts are being done to grow it in that area.
• It has a pungent smell due to sulphide content, as reflected in its name, lending it the trivial name of “stinking gum”. The odour dissipates upon cooking; in cooked dishes.
• The chemical constituents shows that the raw herb has about 70% carbohydrates, 5% proteins, 1% fat, 7% minerals, and has compounds of calcium, phosphorus, sulphurand various aliphatic and aromatic alcohols.

What is the Need?

According to the CSIR-IHBT, Palampur, “the country imports about 1,540 tonnes of raw asafoetida annually from Afghanistan, Iran and Uzbekistan and spends approximately ₹942 crore per year on it. It is important for India to become self-sufficient in hing production”.

It has a wide range of applications in the field of medicine:

• It has been suggested to fight viruses such as influenza.
• Ayurveda suggests it for good digestion.
• To stop hiccups.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY 31^ST JANUARY 2022

Consider the following statements about Bomb cyclone:

1. It is a kind of tropical cyclone.
2. It occurs when a storm central barometric pressure drops at least 24 millibars in 24 hours.
3. It can happen when a cold air mass collides with a warm air mass.

Which of the statements given above is/are correct?

a) 1 and 2 only

b) 2 and 3 only

c) 3 only

d) All of them

ANSWER FOR 29^TH JAN 2022

Answer: d)

Explanation:

• Statement 1 is correct: The electoral bonds will not bear the name of the donor. Thus, the political party might not be aware of the donor identity.
• Statement 2 is correct: The electoral bond will be valid only for fifteen days.
• Statement 3 is correct: A donor will get a tax deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party.
• Statement 4 is correct: On April 12, 2019, the Supreme Court asked all the political parties to
  submit details of donations received through electoral bonds to the ECI.

1. J S Bandukwala: Conscience keeper & courageous crusader READ MORE
2. Between Pride and Modesty READ MORE

1. India’s elephants will suffer huge setback if proposed changes to Wildlife Protection Act are passed READ MORE
2. Climate crisis in North-East India: How geography, rainfall variations define calamity course READ MORE

1. Justice Matters | What a Dalit girl’s rape trial tell us about caste READ MORE
2. Show commitment to equity in the Budget: The Government needs to stop India’s avalanching slide into a grossly divided society, made worse by the pandemic READ MORE
3. Back to school READ MORE
4. Need to revisit global health agenda right now READ MORE

1. Limits of power: SC serves a reminder that the House should work within constitutional parameters READ MORE
2. Angst over IAS transfers is missing the point READ MORE
3. Turning India into a republic of villages READ MORE
4. AIS cadre rules issue is neither complex nor controversial. Here’s what you are missing READ MORE
5. Proposed changes to IAS rules runs unintended risk of undermining administrative ability of states READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. ‘Bomb cyclone’ hits eastern U.S., triggers transport chaos, outages READ MORE
2. Pegasus issue: CPI MP submits notice to move privilege motion against Union Minister Ashwini Vaishnaw READ MORE
3. The rich history of the Chalukya dynasty READ MORE
4. India-ASEAN Digital Work Plan 2022 approved at 2nd ASEAN Digital Ministers (ADGMIN) meeting READ MORE
5. Explained: What is reverse repo normalisation? READ MORE
6. $150-million India-UAE VC Fund set up to boost start-up ecosystem READ MORE

Main Exam    

GS Paper- 1

1. India needs a new social contract READ MORE Social
2. Justice Matters | What a Dalit girl’s rape trial tell us about caste READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. Limits of power: SC serves a reminder that the House should work within constitutional parameters READ MORE
2. Angst over IAS transfers is missing the point READ MORE
3. Turning India into a republic of villages READ MORE
4. AIS cadre rules issue is neither complex nor controversial. Here’s what you are missing READ MORE
5. Proposed changes to IAS rules runs unintended risk of undermining administrative ability of states READ MORE

SOCIAL ISSUES

1. Show commitment to equity in the Budget: The Government needs to stop India’s avalanching slide into a grossly divided society, made worse by the pandemic READ MORE
2. Back to school READ MORE
3. Need to revisit global health agenda right now READ MORE

INTERNATIONAL ISSUES

1.  Michael Brecher: Pioneering scholar of Indian foreign policy READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. Go-ahead for ‘bad bank’: Tackling stressed assets a formidable task READ MORE
2. Deeper correction: Geo-politics & monetary policy have increased market risks READ MORE

ENVIRONMENT AND ECOLOGY  

1. India’s elephants will suffer huge setback if proposed changes to Wildlife Protection Act are passed READ MORE
2. Climate crisis in North-East India: How geography, rainfall variations define calamity course READ MORE

SECURITY

1. Pegasus row: Govt needs to come clean on damning revelations READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. J S Bandukwala: Conscience keeper & courageous crusader READ MORE
2. Between Pride and Modesty READ MORE

Questions for the MAIN exam

1. “The Covid-19 pandemic has made the unequal in India more unequal” Critically analyse the statement in the light of the Inequality Kills report recently released by Oxfam.
2. “A combination of a distorted tax regime, declining social sector expenditure and unbridled privatisation policy have deepened inequality in India” Comment.

QUOTATIONS AND CAPTIONS

• I have often regretted my speech, never my silence.
• The Government needs to stop India’s avalanching slide into a grossly divided society, made worse by the pandemic.
• SC serves a reminder that the House should work within constitutional parameters.
• The Centre and States should work out out-of-the-box ways to bridge the learning gap in absolute and relative terms. The Budget must take the education crisis seriously.
• If India has established robust protocols when it comes to surveillance, as the government claims, stonewalling the damning revelations only adds fuel to the fire.
• Lending in the aftermath of the pandemic will be required to boost economic activities but safeguarding the capital and assets of banks, individuals and companies will also be a must for the economy to flourish without hitches.
• Lower liquidity and higher policy rates will mean a downgrade for risky assets and could lead to a deeper correction.
• Time has perhaps come to amend All India Services Cadre Rules, and make central posting mandatory for a specified period. But only through spirit of federalism.
• The simple fact is that aspiring students are looking for government jobs, but these have declined due to increased privatisation, digitisation and automation.

50-WORD TALK

• The Prime Minister’s meeting with five Central Asian leaders shows New Delhi wants to play the regional Great Game, with former imperial power Russia and big-spending China. Beijing has hit back with big aid promises. New Delhi can’t outspend the dragon, so it has to find ways to outsmart it.
• There is near unanimity that the Budget must signal a much higher level of healthcare spending to not just set right historical deficiencies but also address the glaring deficit in public healthcare that the Covid-19 pandemic has revealed. It is important to remember that India’s healthcare sector was severely deficient even before the pandemic came. Bangladesh, for example, is poorer than India but has a higher life expectancy.

Things to Remember:

• For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
• Whenever any international place will be in news, you should do map work (marking those areas in maps and also exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
• For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
• For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
• Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.

[WpProQuiz 145]

“GST has been a milestone in the economic landscape of India. It has decreased the number of taxes, compliance burden and overall tax burden on the common man while significantly increasing transparency, compliance and overall collection.”#4yearsofGST.

                                                                                                                            ———-PMNarendra Modi

THE CONTEXT: On 1st July 2021, India marked the fourth anniversary of the Goods and Services Tax (GST). The date 1st July has been designated by the Central Government as ‘GST Day’, which is celebrated every year to mark the rollout of the historic tax reform. This article will look into achievements, challenges, and expectations related to the GST regime.

MORE ON THE NEWS:

On May 28th, 2021, at the 43rd meeting of the GST Council, finance ministers of many states raised various concerns like delay in payment of GST compensation to states, unilateral decisions, and the overall distrust between central and state governments. Four years after giving up their freedom to tax goods and services in favor of the GST Council, states are of the view that they have been short-changed and their voices muzzled.

ACHIEVEMENTS OF GST

COOPERATIVE FEDERALISM: One of the biggest triumphs associated with GST is cooperative federalism, which has demonstrated successful collective decision-making through the GST Council. India has served as an example to the world by successfully implementing one of the most complex tax transformation projects for the country.

FUNCTIONING OF GST COUNCIL: The GST Council made corrections to law, issued clarifications on complex issues, rationalized GST rates, and introduced relaxations for dealing with the Covid-19 pandemic, which establishes that the GST Council structure has been very functional and agile.

WIDENED TAX BASE: India’s tax base has almost doubled from 66.25 lakhs to 1.28 crores in the last four years. GST revenue collection in India has been over the Rs 100,000 crore mark for eight consecutive months.

EASE OF DOING BUSINESS: India’s ease of doing business ranking has improved significantly in the last four years. Before GST was implemented, India’s Ease of Doing Business ranking was 130 in 2016. In 2020, India was ranked 63rd on the list.

RATE RATIONALISATION: Over four years GST rates have been reduced on 400 goods & 80 services. According to GOI combined Centre & States rates were above 31% on most items in the pre-GST regime. An RBI report of 2019 estimated that the effective weighted average GST rate declined from 14.4 percent at the time of the introduction of the GST to 11.6 percent.

LOGISTICAL EFFICIENCY, PRODUCTION COST CUT: Over 50% of logistics effort and time is saved since GST has ensured the removal of multiple checkpoints and permits at state border checkpoints. As a result, more road hours and faster delivery have been added which has enhanced the business efficiency in the country. GST has almost ended the era of the multiplicity of taxes and its cascading effect which has sufficiently reduced production costs, leading to better margins for the industry, which were passed on to the consumers in the form of better products or lower prices.

E-WAY BILL: The introduction of the E-way bill resulted in the national unification of permit bill systems, allowing logistics to experience fewer interruptions en route making delivery quick and hassle-free.

COMPETITIVENESS AND COMPLIANCE: GST has improved the competitiveness of domestic industries in the international market by removing hidden and embedded taxes. GST helped in achieving better tax compliance by subsuming multiple taxation and reduction in taxation burden in the last four years.

E-INVOICE: The E-invoicing system helped reduce fake invoicing. The use of technology with online bill generation has resulted in smoother consignment movement and much fewer disputes with officials. After the introduction of E-invoice, GST collections have risen steadily since November 2020, surpassing the Rs. 1 lakh crore mark on several occasions.

REDUCED  TRANSACTION COSTS: After the introduction of GST, there has been a significant reduction in transaction costs. While earlier, all the interstate transactions were loaded with an additional cost of 2% (Central Sales Tax), this has now been reduced to 0%. This reduction has been a huge breakthrough in the interstate movement of products, allowing the country to boast of a single national unified market for businesses.

CHALLENGES/PROBLEMS OF GST

CONCERNS  HIGHLIGHTED BY THE 15^th FINANCE COMMISSION REPORT:

• The multiplicity of tax rates
• The shortfall in GST collections vis-à-vis the forecast
• High volatility in GST collections
• Inconsistency in the filing of returns
• Dependence of States on the compensation from Centre

CONCERNS RAISED BY STATE FINANCE MINISTERS:

• Delay in payment of GST compensation to states.
• The issue of reduction in GST on Covid vaccines and essentials.
• Unilateral decisions such as the imposition of cases (whose proceeds go to only the Centre)
• Vertical split on party lines on key issues.
• Veto powers of the centreonGST Council decisions.

COMPENSATION CONUNDRUM:

• The biggest reason states agreed to give up their autonomy to tax goods and services was an assurance by the central government that it would compensate them for any revenue loss from subsuming indirect taxes such as sales tax/VAT into GST.
• The GST (Compensation to States) Act, enacted in 2017, guarantees states 14 percent annual growth in GST revenue over base year FY16 for five years between July 2017 and June 2022.
• While this worked well till FY19, problems cropped up in FY20 when the Centre started finding it tough to pay states as economic slowdown affected its revenues. The Covid-19 outbreak aggravated the problem by putting huge pressure on both countries and states.

TAX UNILATERALISM: 

• Cess revenue is not shared with states.
• Close to 18 percent of central government revenue is being raised from cess and not distributed (among states). Total control of finances is with the central government.
•  It needs to be discussed and reviewed.

EXPERTS CONCERNED OVER GST GROWTH:

• Experts believe the government has been unable to widen the tax net, which is why GST collections have not increased beyond a certain limit.
• Some experts suggest that the GST net may not widen further as many small businesses have not enrolled under the tax regime due to complex paperwork.

CONSTANT AMENDMENTS:

• Over the last few years, the GST law has seen many amendments. To date, more than 1,000 notifications/circulars/instructions/orders have been issued by the government machinery.
• All these revisions often confused the taxpayer and as well the tax administrators which created misunderstandings and misconceptions.

TECHNICAL GLITCHES:

• Continuous system failures and unexpected glitches faced by the industry have forced Government to extend due dates, waiver of late fees and interest liabilities. Late announcements of waiver in late fee have come out as dissatisfaction amongst the honest taxpayers also.
• Small and medium businesses are still grappling to adapt to the tech-enabled regime. The fundamental principles on which the GST law was built viz. The seamless flow of input credits and ease of compliance has been impaired by IT glitches.

IMPLEMENTATION DELAYS:

• The late implementation of E-invoicing, QR code, and E-way Bill blemished the original idea behind this which was contemplated as a revolutionary change in the tax system to curb tax evasion.

NON-IMPLEMENTATION OF GSTR-2:

• GSTR which was the only control for systemic reconciliation was never implemented. To prevent any bogus claim of ITC, reconciliations are required to be controlled by the system. However, since it was never implemented now taxpayers are asked to provide self-attested offline reconciliations maintained in annual return GSTR 9 or GSTR 9C.

REFUND DELAY ISSUES:

• Automatic processing of export refunds has always been an area of major concern under the GST. Since there are manual approvals involved in the existing process, there are chances of a discrepancy, human error, and delay in refund processing which goes against the expectations of the exporters from the system.

LOW REVENUE:

• Widespread non-compliance and non-filing of GST returns were considerable in the first three years of GST which led to low revenue collections.

WAY FORWARD

The GST structure needs an overhaul for the revenue-enhancing promise to be met. The union can at minimum do three things.

1. Reaffirm its commitment to cooperative, consultative principles of federalism by reforming the functioning of the GST Council.
2. Offer the FY21 compensation cess as a transfer, not a back-to-back loan with the caveat that the compensation rate will be re-negotiated.
3. Be transparent about the current macro-economic scenario through an honest appraisal that revisits revenue projections.

• The pandemic has had severe impacts on GST also and led to economic contraction. Certain structural level changes to the law may help boost the business and economy.
• The policymakers need to contemplate the inclusion of petroleum and related products within the GST
• The GST Appellate Tribunal should be constituted as all taxpayers do not have the finances or means to approach the High Court for every practical difficulty faced.
• Streamlining of anti-profiteering measures and simplification of compliance procedures also needs to be revisited to ensure that the cost efficiency and reduction in prices envisaged under GST law finally reach the common man.

THE CONCLUSION: Although the shortcomings must be swiftly resolved, it needs to be understood that it takes time to reap the benefits of such a mammoth structural change. The law is still a ‘work-in-progress’ and the process of evolution. The union government must act now to deliver on its promise of a ‘Good & Simple Tax’ in the times to come.