THE INTERNATIONAL RELATIONS

1. INDIA, NEPAL SIGN MOU ON CONSTRUCTION OF MOTORABLE BRIDGE OVER MAHAKALI RIVER

THE CONTEXT: India and Nepal signed a Memorandum of Understanding (MoU) for the construction of a motorable Bridge over the Mahakali River connecting Dharchula (India) with Darchula (Nepal), under Indian grant assistance.

THE EXPLANATION:

• Benefits: The project will improve cross-border connectivity between Nepal’s Sudur paschim province and India’s Uttarakhand state, where close people-to-people ties exist between communities on both sides of the border.
• This is in line with both governments’ shared goal of increasing cross-border connectivity to facilitate commercial, cultural, and people-to-people exchanges. The construction of the bridge is planned to commence soon.

India- Nepal Relations:

As close neighbours, both nations share unique ties of friendship and cooperation characterized by an open border and deep-rooted people-to-people ties of kinship and culture. The free movement of people across borders has a long history. Nepal has a border with five Indian states – Sikkim, Bihar, Uttar Pradesh, West Bengal, and Uttarakhand – spanning over 1,850 kilometres.

VALUE ADDITION:

• Kali river or Sharda River, it originates at Kalapani in the Himalayas at an elevation of 3,600 m (11,800 ft) in the Pithoragarh district in Uttarakhand, India. It flows along Nepal’s western border with India and has a basin area.
• Its major tributaries are the Dhauliganga, Goriganga, and Sarju. The Sarda Barrage (dam), near Banbasa (Uttarakhand), is the source of the Sarda Canal (completed 1930), one of the longest irrigation canals in northern India. It joins Ghaghra River, a tributary of the Ganges.
• NOTE: The Pancheshwar multipurpose dam project, is on the Kali river.

THE ENVIRONMENT AND ECOLOGY

2. INDIA ADDS TWO NEW RAMSAR SITES

THE CONTEXT: On World Wetlands Day, 2022 (2^nd February ) India added two Ramsar sites upscaling the number from 47 to 49.

THE EXPLANATION:

• The Khijadia Wildlife Sanctuary in Gujarat and Bakhira Wildlife Sanctuary in Uttar Pradesh are the latest Ramsar sites to join the list of protected wetlands in the country.
• World Wetlands Day 2022 theme is ‘Wetlands Action for People and Nature,’ which highlights the importance of actions to ensure the conservation and sustainable use of wetlands for humans and planetary health.
• All 49 Ramsar Sites together now cover 10,93,636 Ha, making it the highest in South Asia. Bakhira Wildlife Sanctuary offers a safe wintering and staging ground for a large number of special Central Asian Flyway while Khijadia Wildlife Sanctuary is a coastal wetland with rich avifaunal diversity. It provides a safe habitat to endangered and vulnerable species.
• The original Wetland Atlas was released in 2011. The decadal change atlas highlights the changes which have happened in wetlands across the country.

Value Addition:

What is Ramsar Sites?

• Any wetland site which has been listed under the Ramsar Convention that aims to conserve it and promote sustainable use of its natural resources is called a Ramsar Site.
• Ramsar Convention is known as the Convention of Wetlands. It was established in 1971 by UNESCO and came into force in 1975.
• India is a party to the Ramsar Convention. India signed under it on 1st February 1982.

What is Montreux Record? ·         The Montreux Record is a register of wetland sites on the List of Wetlands of International Importance where changes in ecological character have occurred, are occurring, or are likely to occur as a result of technological developments, pollution or other human interference. ·         Currently, two wetlands of India are in Montreux record: Keoladeo National Park (Rajasthan) and Loktak Lake (Manipur). ·         Chilika lake (Odisha) was placed in the record but was later removed from it.

• Contracting Parties are expected (but not mandated) to manage their Ramsar Sites so as to maintain their ecological character and retain their essential functions and values for future generations.
• The convention specifies that “Contracting Parties shall (not may) formulate and implement their planning so as to promote the conservation of the wetlands included in the List”.
• The Changwon Declaration on human well-being and wetland 2008 – It highlights positive action for ensuring human well-being and security in the future under the themes – water, climate change, people’s livelihood and health, land use change, and biodiversity.
• Many important wetlands extend as one ecologically coherent whole across national borders. In these cases,COP can agree to establish Ramsar Sites on their territory as parts of a bigger Transboundary Ramsar Site.

The Ramsar Convention works closely with six organizations known as International Organization Partners(IOPs). These are:

• Birdlife International
• International Union for Conservation of Nature (IUCN)
• International Water Management Institute (IWMI)
• Wetlands International
• World Wide Fund for Nature (WWF)
• International Wildfowl & Wetlands Trust (WWT)

Prelims Perspective:

• Uttar Pradesh (10) has the maximum number of Wetlands in India.
• Sundarbans is the largest Ramsar Site of India (Added in 2019).
• Renuka Wetland (Area – 20 ha) in Himachal Pradesh is the smallest wetland of India.
• Chilika Lake (Orissa) and Keoladeo National Park (Rajasthan) were recognized as the first Ramsar Sites of India.
• The world’s first site was the Cobourg Peninsula in Australia, designated in 1974.
• The countries with the most Ramsar Sites are the United Kingdom with 175 and Mexico with 142.
• Bolivia has the largest area under Ramsar protection.

THE ECONOMIC DEVELOPMENT

3. SRI LANKA SIGN $500-MILLION LOAN AGREEMENT

THE CONTEXT: The Export Import Bank (EXIM) of India and the Government of Sri Lanka on signed a $500- million Line of Credit agreement aimed at helping Sri Lanka cope with its current fuel shortages, amid one of the worst economic meltdowns facing the island nation.

THE EXPLANATION:

• According to a statement from the Indian High Commission in Colombo, India’s support for fuel imports through the Line of Credit, is in response to Colombo’s “urgent requirement”.
• Recently, India extended a $400 million currency swap to Sri Lanka, while also deferring another $500 million due for settlement to the Asian Clearing Union (ACU), to help the island nation cope with its dollar crunch.
• Further to the $900 million extended then, and the emergency credit for fuel imports now, both governments are in talks for another $ 1 billion assistance that Colombo has sought from New Delhi, at a time when the island nation faces an unprecedented economic crisis.

What is Line of Credit?

• The Government of India is reasonably satisfied with the progress in the implementation of Lines of Credit supported by India in foreign nations over the past 3 years.
• The Line of Credit is not a grant but a ‘soft loan’ provided on concessional interest rates to developing countries, which has to be repaid by the borrowing government.

 Value Addition:

• Exim Bank was established under the Export-Import Bank of India Act, 1981 as a purveyor of export credit, mirroring global Export Credit Agencies. Exim Bank serves as a growth engine for industries and SMEs through a wide range of products and services.
• This includes import of technology and export product development, export production, export marketing, pre-shipment and post-shipment and overseas investment.
• Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries to import developmental and infrastructure projects, equipment, goods and services from India, on deferred credit terms.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY 3^rd FEBRUARY 2022

Q. Consider the following statements about Ramsar Convention:

1. Contracting Parties are mandated to manage their Ramsar Sites so as to maintain their ecological character.
2. Contracting Parties shall formulate and implement their planning so as to promote the conservation of the wetlands included in the Ramsar List.
3. There is no provision to establish transboundary Ramsar site between more than one nation.

Which of the given statements are incorrect?

a 1 and 2 only

b 2 and 3 only

c 1 and 3 only

d 1, 2 and 3

ANSWER FOR 2^nd FEB 2022

Answer: b

Explanation:

• Statement 1 is incorrect: Indira Gandhi was first woman minister to present budget in India, Nirmala Sitaraman is second woman.
• Statement 2 is correct: Morarji Desai had presented maximum number (10 times) of budgetsso far.
• Statement 3 is correct: Railway budget was merged with Union budget in 2017 (Arun Jaitleywas Finance Minister).

[WpProQuiz 148]

1. About Ethnocentrisms READ MORE
2. Consciousness is not located in the brain READ MORE

1. Artificial intelligence technologies have a climate cost READ MORE  
2. Frequent marine heatwaves in Indian Ocean disrupt India‘s monsoon patterns READ MORE

1. Liberal ideology and gender stereotypes READ MORE
2. Children’s share in Budget is lowest in 11 years READ MORE
3. Strengthen state-level elementary education architecture READ MORE

1. US Imperial excess: On Governors and limits- Governors must work within constitutional parameters, not as agents of the Centre READ MORE
2. Make courts more accessible READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. FDI Inflow READ MORE
2. Strengthening of PESA Act READ MORE
3. World Wetlands Day celebrated at Sultanpur National Park READ MORE
4. Export Import Bank of India, Sri Lanka sign $500-million loan agreement READ MORE
5. Philosopher-saint Ramanujacharya, and the Statue of Equality in his honour READ MORE
6. Two more Ramsar sites announced on World Wetlands Day READ MORE
7. India, Nepal sign MoU on construction of motorable bridge over Mahakali river READ MORE

Main Exam   

GS Paper- 1

1. Liberal ideology and gender stereotypes READ MORE

GS Paper- 1

POLITY AND GOVERNANCE

1. US Imperial excess: On Governors and limits- Governors must work within constitutional parameters, not as agents of the Centre READ MORE
2. Make courts more accessible READ MORE

SOCIAL ISSUES

1. Children’s share in Budget is lowest in 11 years READ MORE
2. Strengthen state-level elementary education architecture READ MORE

INTERNATIONAL ISSUES

1. Ink India-Britain free trade, unlock new opportunity: There are good economic and strategic reasons for an FTA that will spell many opportunities for both countries READ MORE
2. Explained: The India-Israel relationship READ MORE

GS Paper- 1

ECONOMIC DEVELOPMENT

1. Make haste slowly: Digital rupee can have many implications for RBI. Best to take time over it, like other countries READ MORE
2. Repo rate cannot be the basis for bank loans READ MORE
3. Fiscal constraints: India needs to boost tax-to-GDP ratio READ MORE
4. The Bad Bank READ MORE

ENVIRONMENT AND ECOLOGY  

1. Artificial intelligence technologies have a climate cost READ MORE  
2. Frequent marine heatwaves in Indian Ocean disrupt India‘s monsoon patterns READ MORE

SECURITY

1. Border infrastructure: India out to counter China’s development overdrive READ MORE

GS Paper- 1

ETHICS EXAMPLES AND CASE STUDY

1. About Ethnocentrisms READ MORE
2. Consciousness is not located in the brain READ MORE

Questions for the MAIN exam

1. ‘CBDCs may be inevitable but the need for RBI to cover for all the possible risks is non-negotiable’. In the light of the statement discuss the implications of the digital currency for the banking system and how the RBI can fix them.
2. Governors must work within constitutional parameters, not as agents of the Centre. Analyse the statement with reference to recent developments in certain states.

QUOTATIONS AND CAPTIONS

• Aggression is not the problem, it is the outcome of a problem.
• There are good economic and strategic reasons for an FTA that will spell many opportunities for both India and Britain.
• The AI-climate change link is understudied, not least because the largest companies working in this space are neither transparent nor meaningfully committed to understanding it.
• Governments of developing countries, India included, should also assess their technology-led growth priorities in the context of AI’s climate costs.
• There is a wide variation in the extent of integration among administrative bodies overseeing school administration at the state level.
• More food means less hunger. But reducing food waste and foodgrain storage losses also means more food which means less hunger, and it also compensates for any yield gap because of the shift to natural farming.
• Both the direct and indirect tax systems need comprehensive review. Rationalisation of rates and improvement in compliance will help create the much-needed fiscal space.
• Ultimately the bad bank may be a good opportunity for loan evaders and for those eager to acquire cheap the units set up with huge borrowing.
• It is also imperative to update our weather models to skilfully predict the challenges presented by a warming world.

50-WORD TALK

• The rollout of ZyCov-D vaccine is a very welcome addition to India’s Covid vaccine basket. India has done brilliantly with its vaccine coverage but there is still much ground to cover, especially with third shots and considering variants like Omicron. India should also follow the science now on mixing boosters.
• The Delhi High Court’s right: It’s “absurd” for the state government to fine people not wearing masks inside their own cars. Government counsel Rahul Mehra agrees—but the mandate, upheld by a judge last year, will stand until officially reviewed. Also absurd: making rules that defy science and common sense.
• Modi government’s announcement to tax crypto assets without creating a regulatory framework for their transactions is baffling. The temptation to dip into the digital goldmine is understandable, but the lack of regulations in a highly risky asset category can hurt investors. Rules should be framed before this becomes a reality.

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.

THE HIGHLIGHTS OF THE BUDGET 2020-2023

THE CONTEXT: The Union Budget seeks to complement macro-economic level growth with a focus on micro-economic level all inclusive welfare. The Union Minister for Finance & Corporate Affairs, tabled the Union Budget 2022-23 in Parliament on 1st February 2022.

PART A

• India’s economic growth estimated at 9.2% to be the highest among all large economies.
• 60 lakh new jobs to be created under the productivity linked incentive scheme in 14 sectors.
• PLI Schemes have the potential to create an additional production of Rs 30 lakh crore.

Entering Amrit Kaal, the 25 year long lead up to India @100, the budget provides impetus for growth along four priorities:

PM GATISHAKTI

The seven engines that drive PM GatiShakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure.

PM GatiShkati National Master Plan

• The scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency.
• The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM GatiShakti framework.

Road Transport

• National Highways Network to be expanded by 25000 Km in 2022-23.
• Rs 20000 Crore to be mobilized for National Highways Network expansion.

Multimodal Logistics Parks

• Contracts to be awarded through PPP mode in 2022-23 for implementation of Multimodal Logistics Parks at four locations.

Railways

• One Station One Product concept to help local businesses & supply chains. 2000 Km of railway network to be brought under Kavach, the indigenous world class technology and capacity augmentation in 2022-23.
• 400 new generation Vande Bharat Trains to be manufactured during the next three years.
• 100 PM GatiShakti Cargo terminals for multi-modal logistics to be developed during the next three years.

Parvatmala

• National Ropeways Development Program, Parvatmala to be taken up on PPP mode.
• Contracts to be awarded in 2022-23 for 8 ropeway projects of 60 Km length.

INCLUSIVE DEVELOPMENT

Agriculture

• 2.37 lakh crore direct payment to 1.63 crore farmers for procurement of wheat and paddy.
• Chemical free Natural farming to be promoted throughout the county. Initial focus is on farmer’s lands in 5 Km wide corridors along river Ganga.
• NABARD to facilitate fund with blended capital to finance startups for agriculture & rural enterprise.
• ‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides and nutrients.

Ken Betwa project

• 1400 crore outlay for implementation of the Ken – Betwa link project.
• 08 lakh hectares of farmers’ lands to receive irrigation benefits by Ken-Betwa link project.

MSME

• Udyam, e-shram, NCS and ASEEM portals to be interlinked.
• 130 lakh MSMEs provided additional credit under Emergency Credit Linked Guarantee Scheme (ECLGS)
• ECLGS to be extended up to March 2023.
• Guarantee cover under ECLGS to be expanded by Rs 50000 Crore to total cover of Rs 5 Lakh Crore.
• Rs 2 lakh Crore additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
• Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6000 Crore to be rolled out.

Skill Development

• Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through on-line training.
• Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS).

Education

• ‘One class-One TV channel’ programme of PM eVIDYA to be expanded to 200 TV channels.
• Virtual labs and skilling e-labs to be set up to promote critical thinking skills and simulated learning environment.
• High-quality e-content will be developed for delivery through Digital Teachers.
• Digital University for world-class quality universal education with personalised learning experience to be established.

Health

• An open platform for National Digital Health Ecosystem to be rolled out.
• ‘National Tele Mental Health Programme’ for quality mental health counselling and care services to be launched.
• A network of 23 tele-mental health centres of excellence will be set up, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.

Saksham Anganwadi

• Integrated benefits to women and children through Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0.
• Two lakh anganwadis to be upgraded to Saksham Anganwadis.

Har Ghar, Nal Se Jal

• 60,000 crore allocated to cover 3.8 crore households in 2022-23 under Har Ghar, Nal se Jal.

Housing for All

• 48,000 crore allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana.

Prime Minister’s Development Initiative for North-East Region (PM-DevINE)

• New scheme PM-DevINE launched to fund infrastructure and social development projects in the North-East.
• An initial allocation of Rs. 1,500 crore made to enable livelihood activities for youth and women under the scheme.

Vibrant Villages Programme

• Vibrant Villages Programme for development of Border villages with sparse population, limited connectivity and infrastructure on the northern border.

Banking

• 100 per cent of 1.5 lakh post offices to come on the core banking system.
• Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75 districts.

e-Passport

• e-Passports with embedded chip and futuristic technology to be rolled out.

Urban Planning

• Modernization of building byelaws, Town Planning Schemes (TPS), and Transit Oriented Development (TOD) will be implemented.
• Battery swapping policy to be brought out for setting up charging stations at scale in urban areas.

Land Records Management

• Unique Land Parcel Identification Number for IT-based management of land records.

Accelerated Corporate Exit

• Centre for Processing Accelerated Corporate Exit (C-PACE) to be established for speedy winding-up of companies.

AVGC Promotion Task Force

• An animation, visual effects, gaming, and comic (AVGC) promotion task force to be set-up to realize the potential of this sector.

Telecom Sector

• Scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.

Export Promotion

• Special Economic Zones Act to be replaced with a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.

Atma Nirbharta in Defence:

• 68% of capital procurement budget earmarked for domestic industry in 2022-23, up from 58% in 2021-22.
• Defence R&D to be opened up for industry, startups and academia with 25% of defence R&D budget earmarked.
• Independent nodal umbrella body to be set up for meeting testing and certification requirements.

Sunrise Opportunities

• Government contribution to be provided for R&D in Sunrise Opportunities like Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems.

Energy Transition and Climate Action:

• Additional allocation of Rs. 19,500 crore for Production Linked Incentive for manufacture of high efficiency solar modules to meet the goal of 280 GW of installed solar power by 2030.
• Five to seven per cent biomass pellets to be co-fired in thermal power plants:
• CO2 savings of 38 MMT annually,
• Extra income to farmers and job opportunities to locals,
• Help avoid stubble burning in agriculture fields.
• Four pilot projects to be set up for coal gasification and conversion of coal into chemicals for the industry
• Financial support to farmers belonging to Scheduled Castes and Scheduled Tribes, who want to take up agro-forestry.

Public Capital Investment:

• Public investment to continue to pump-prime private investment and demand in 2022-23.
• Outlay for capital expenditure stepped up sharply by 4% to Rs. 7.50 lakh crore in 2022-23 from Rs. 5.54 lakh crore in the current year.
• Outlay in 2022-23 to be 2.9% of GDP.
• ‘Effective Capital Expenditure’ of Central Government estimated at Rs. 10.68 lakh crore in 2022-23, which is about 4.1% of GDP.

GIFT-IFSC

• World-class foreign universities and institutions to be allowed in the GIFT City.
• An International Arbitration Centre to be set up for timely settlement of disputes under international jurisprudence.

Mobilising Resources

• Data Centres and Energy Storage Systems to be given infrastructure status.
• Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystem. Measures to be taken to help scale up this investment.
• Blended funds to be promoted for sunrise sectors.
• Sovereign Green Bonds to be issued for mobilizing resources for green infrastructure.

Digital Rupee

• Introduction of Digital Rupee by the Reserve Bank of India starting 2022-23.

Providing Greater Fiscal Space to States

• Enhanced outlay for ‘Scheme for Financial Assistance to States for Capital Investment’:
• From Rs. 10,000 crore in Budget Estimates to Rs. 15,000 crore in Revised Estimates for current year
• Allocation of 1 lakh crore in 2022-23 to assist the states in catalysing overall investments in the economy: fifty-year interest free loans, over and above normal borrowings
• In 2022-23, States will be allowed a fiscal deficit of 4% of GSDP, of which 0.5% will be tied to power sector reforms

Fiscal Management

• Budget Estimates 2021-22: Rs. 34.83 lakh crore.
• Revised Estimates 2021-22: Rs. 37.70 lakh crore.
• Total expenditure in 2022-23 estimated at Rs. 39.45 lakh crore.
• Total receipts other than borrowings in 2022-23 estimated at Rs. 22.84 lakh crore.
• Fiscal deficit in current year: 6.9% of GDP (against 6.8% in Budget Estimates).
• Fiscal deficit in 2022-23 estimated at 6.4% of GDP.

PART B

DIRECT TAXES

• Vision to establish a trustworthy tax regime.
• To further simplify tax system and reduce litigation.

Introducing new ‘Updated return’

• Provision to file an Updated Return on payment of additional tax.
• Will enable the assesses to declare income missed out earlier.
• Can be filed within two years from the end of the relevant assessment year.

Cooperative societies

• Alternate Minimum Tax paid by cooperatives brought down from 18.5 per cent to 15 per cent.
• To provide a level playing field between cooperative societies and companies.
• Surcharge on cooperative societies reduced from 12 per cent to 7 per cent for those having total income of more than Rs 1 crore and up to Rs 10 crores.

Tax relief to persons with disability

• Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.

Parity in National Pension Scheme Contribution

• Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
• Brings them at par with central government employees.
• Would help in enhancing social security benefits.

Incentives for Start-ups

• Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups to avail tax benefit.
• Previously the period of incorporation valid up to 31.03.2022.

Incentives under concessional tax regime

• Last date for commencement of manufacturing or production under section 115 BAB extended by one year i.e. from 31st March, 2023 to 31st March, 2024.

Scheme for taxation of virtual digital assets

• Specific tax regime for virtual digital assets introduced.
• Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per cent.
• No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
• Loss from transfer of virtual digital asset cannot be set off against any other income.
• To capture the transaction details, TDS to be provided on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
• Gift of virtual digital asset also to be taxed in the hands of the recipient.

Litigation Management

• In cases where question of law is identical to the one pending in High Court or Supreme Court, the filing of appeal by the department shall be deferred till such question of law is decided by the court.
• To greatly help in reducing repeated litigation between taxpayers and the department.

Tax incentives to IFSC

• Subject to specified conditions, the following to be exempt from tax
• Income of a non-resident from offshore derivative instruments.
• Income from over the counter derivatives issued by an offshore banking unit.
• Income from royalty and interest on account of lease of ship.
• Income received from portfolio management services in IFSC.

Rationalization of Surcharge

• Surcharge on AOPs (consortium formed to execute a contract) capped at 15 per cent.
• Done to reduce the disparity in surcharge between individual companies and AOPs.
• Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
• To give a boost to the start up community.

Health and Education Cess

• Any surcharge or cess on income and profits not allowable as business expenditure.

Deterrence against tax-evasion

• No set off, of any loss to be allowed against undisclosed income detected during search and survey operations.

Rationalizing TDS Provisions

• Benefits passed on to agents as business promotion strategy taxable in hands of agents.
• Tax deduction provided to person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.

INDIRECT TAXES

Remarkable progress in GST

• GST revenues are buoyant despite the pandemic – Taxpayers deserve applause for this growth.

Special Economic Zones

• Customs Administration of SEZs to be fully IT driven and function on the Customs National Portal – shall be implemented by 30th September 2022.

Customs Reforms and duty rate changes

• Faceless Customs has been fully established. During Covid-19 pandemic, Customs formations have done exceptional front line work against all odds displaying agility and purpose.

Project imports and capital goods

• Gradually phasing out of the concessional rates in capital goods and project imports and applying a moderate tariff of 7.5 percent – conducive to the growth of domestic sector and ‘Make in India’.
• Certain exemptions for advanced machineries that are not manufactured within the country shall continue.
• A few exemptions introduced on inputs, like specialised castings, ball screw and linear motion guide – to encourage domestic manufacturing of capital goods.

Review of customs exemptions and tariff simplification

• More than 350 exemption entries proposed to be gradually phased out, like exemption on certain agricultural produce, chemicals, fabrics, medical devices, & drugs and medicines for which sufficient domestic capacity exists.
• Simplifying the Customs rate and tariff structure particularly for sectors like chemicals, textiles and metals and minimise disputes; Removal of exemption on items which are or can be manufactured in India and providing concessional duties on raw material that go into manufacturing of intermediate products – in line with the objective of ‘Make in India’ and ‘Atma nirbhar Bharat’.

Sector specific proposals

Electronics

• Customs duty rates to be calibrated to provide a graded rate structure – to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters.
• Duty concessions to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items – To enable domestic manufacturing of high growth electronic items.

Gems and Jewellery

• Customs duty on cut and polished diamonds and gemstones being reduced to 5 per cent; Nil customs duty to simply sawn diamond – To give a boost to the Gems and Jewellery sector
• A simplified regulatory framework to be implemented by June this year – To facilitate export of jewellery through e-commerce.
• Customs duty of at least Rs 400 per Kg to be paid on imitation jewellery import – To disincentive import of undervalued imitation jewellery.

Chemicals

Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining being reduced; Duty is being raised on sodium cyanide for which adequate domestic capacity exists – This will help in enhancing domestic value addition.

MSME

• Customs duty on umbrellas being raised to 20 per cent. Exemption to parts of umbrellas being withdrawn.
• Exemption being rationalised on implements and tools for agri-sector which are manufactured in India
• Customs duty exemption given to steel scrap last year extended for another year to provide relief to MSME secondary steel producers
• Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked – to tackle prevailing high prices of metal in larger public interest.

Exports

• To incentivise exports, exemptions being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes.
• Duty being reduced on certain inputs required for shrimp aquaculture – to promote its exports.

Tariff measure to encourage blending of fuel

• Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1st of October 2022 – to encourage blending of fuel.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY 2^nd FEBRUARY  2022

Q. Consider the following statements about Union budget:

1. Nirmala Sitharaman is first woman finance minister to present budget.
2. Morarji Desai had presented maximum number of budgets so far.
3. Railway budget was merged with Union budget in 2017.

Which of the above given statements are correct ?

a 1 and 2 only

b 2 and 3 only

c 1 and 3 only

d 1, 2 and 3

ANSWER FOR 1^st FEB 2022

Answer: b

Explanation:

• Statement 1 is incorrect: It is kind of extra-tropical or mid-latitude cyclone.
• Statement 2 is correct: It occurs when a storms central barometric pressure drops at least 24 millibars in 24 hours.
• Statement 3 is correct: It can happen when a cold air mass collides with a warm air mass.
• Statement 3 is correct: It can happen when a cold air mass collides with a warm air mass.

THE CONTEXT: The recent state Assembly Elections have raised a debate on whether the Election Commission of India needs to be further strengthened as an independent institution or whether political actors voluntarily need to be more rule-abiding, which was the basis on which the Model Code of Conduct was adopted in 1962.

ISSUES HIGHLIGHTED DURING RECENT ASSEMBLY ELECTION

THE ISSUE OF MODEL CODE OF CONDUCT: In simple terms, a Model Code of Conduct is a set of minimum standards and codes for political parties, their candidates, and supporters to adhere to, to ensure free and fair elections. Bur in recent it has been alleged that Mode code of conduct is working in favour of central govt. During the Bengal poll West Bengal Chief Minister Mamata Banerjee asked for the renaming of the Model Code of Conduct as Modi Code of Conduct.

THE INFLUENCE OF RULING PARTY: The comeback of the single-party majority in Parliament in recent years has once again brought the issue of the heavy influence of the Executive on the Election Commission of India under scrutiny. For instance, the Madras High Court had to direct the ECI to probe allegations against BJP in Puducherry, where it was accused of stealing Aadhaar details of voters for targeted campaigning. It was expected that ECI could have taken suo moto cognizance of this incident. Again in West Bengal, there have been allegations that Central Armed Police Forces (CAPF) are acting under influence of the ruling party at the Centre.

THE WORKING PROCESS OF ECI: ECI conducted the election of West Bengal in eight phases, which raised many questions. At a time when the country is facing the worst situation of the pandemic, the eight phases in a single state election question the credibility of the commission, whether the commission is working under pressure. Moreover, the madras high court is criticize the ECI and said to Election officers should be booked under murder charges.

DECISION-MAKING AUTONOMY OF COMMISSIONER IS UNDER DOUBT: It was seen in the Ashok Lavasa case (member of the ECI from January 2018 to August 2020). On occupying the position, Lavasa apparently chose to take an “independent” view on certain issues. Suddenly, cases against his family members were opened up. Being the senior-most, Lavasa would have been the logical choice for the post of CEC but finally chose not to put up a fight and went on to join the Asian Development Bank.

QUESTION ON THE RATIONALITY OF ECI: In the recent Bengal election, there have been various incidents that merit such kind of reasoning whether it was EVMs VVPATs being found at a TMC leader’s residence in Uluberia or in a BJP candidate’s car in Assam, the alleged distribution of cash coupons by BJP during the West Bengal polls or the most recent controversial remark by Mamata Banerjee on “United Muslim” appeal.

OTHER ISSUES: There are many other issues that were highlighted in contemporary times:

• TRANSPARENCY IN THE FUNDING OF POLITICAL PARTIES: Recent debate on the electoral bond shows that there is a lack of transparency in the funding of political parties, which led to the black money.
• CRIMINALIZATION OF POLITICAL:  According to the ADR report, 42% of elected MPs are from a criminal background in the 2019 election.
• VIOLENCE DURING THE ELECTION: Although violence during the election has been declined it is still continuing and recently in Bengal. In the recent election, the clash between BJP and TMC volunteers was a very serious issue.
• USE OF BLACK MONEY IN ELECTION: Although, the election commission has set an upper limit of 70 lakh for election campaigning spending the actual figure is more than this limit. It is well-known fact that black money is frequently used in the election.
• Apart from the above challenges, there are many other challenges against the election commission, such as

• Misuse of caste and religion for electoral gains
• Regulating Political Parties
• Role of media (including social media)
• Regulating the political parties and internal democracy in them.
• Illiteracy of voters
• Awareness among the voters about the candidate’s background.

Such allegations are obstructing the independent and autonomous image of ECI.

HOW ELECTION CAN WORK AS AN CREDIBLE INSTITUTE

• The Election Commission needs to come up with reforms focusing on not only regulating the conduct of the candidates during polls but also putting in place a performance report of the candidates.
• Such a report should not only talk about the political performance of the candidate but in case of a first-time candidate highlight his/her prior conduct before joining politics as it would enable the electorate to assess the credibility of the candidate.
• This would also enable the electoral to go beyond factors like caste, community, religious identity, or the self-proclaimed claims of candidates.
• In order to maintain the integrity and credibility of such a report, it would be best if it is prepared by the Election Commission that not only releases data through internet, television, or other audio-visual means but bestows the responsibility on the booth level officers to disseminate such information into each and every part of the concerned constituency.
• In this respect, the recent Kerala High Court judgement directing the Election Commission to ensure that the voters must be able to see names, photographs, and symbols of candidates on the EVM machines with clarity acts as an example that the Commission can follow.

N. SESHAN REFORMS CAN BE A ROLE MODEL

• Seen in this light, inspiration can be drawn from TN Seshan who as a Chief Election Commissioner between 1990 and 1996 brought about massive changes and made the ECI an independent institution in spirit.
• He had brought about changes in the conduct of elections by employing special electoral officers to ensure compliance with the Representation of People Act, 1951, to check for incendiary campaign speeches, voter intimidation, vote-stealing, and other tactics often associated with electoral violence.

1. Reforms did by Seshan as CEC:

1. Introduction of Voter IDs for all eligible voters.
2. Strict actions for implementation Election Code of Conduct
3. Set expenditure limit for candidates in the elections
4. Prohibition of distribution of liquor/money during elections.
5. Prohibited bribing or intimidating voters.
6. Use of official machinery for campaigning. But unfortunately, this practice is still prevalent.
7. Implementation of the law in the election process.
8. Autonomous status to Election Commission of India.
9. Prohibition of use of loudspeakers and high-volume music without prior written permission.
10. Prohibited candidates from demanding votes on the basis of caste or communal feelings.
11. Prohibition of use of the religious place for election campaigns.

2. Legacy of T. N. Seshan

• This was the time when the Election Commission was known to a few people and the biggest festival of democracy i.e. Election was under the shadow of big politicians but the entry of T. N. Seshan compelled everybody to accept that the Election Commission is a constitutional body and it has some powers too.
• Although, in starting many political parties and everybody stands against him later on this situation became like “Seshan versus Nation”. But later on, the election reforms have taken place in the country and the country experienced many new reforms in the way of the election process.
• He imitated many crucial reforms to clean the Indian politics and reestablished the reputation of the Election commission as a result Mr. T.N. Seshan is known as the father of electoral reforms in India.

WHY DOES INDIA NEED ELECTORAL REFORMS AGAIN LIKE SESHAN DID IN THE PAST?

The constitutional body in India is facing many challenges and criticisms. To the unwillingness of the political parties, Indian politics is still dominated by the rich peoples and now Indian politics became the symbol of 3Ms; Money, Muscles, and Media (including the social kind).

HOW THE IMAGE OF THE ELECTION COMMISSION OF INDIA IS DECLINING?

1. N. Seshan brought radical changes in the Indian election process and re-established the image of ECI as a watchdog of the Indian political process but in recent time the body is facing the above issues and continually losing it reputation as a credible body.

• Although ECI is facing several issues like ECs, allegations of partisanship, and new problems such as voter bribery and paid news.
• But 2019 general election and recent assembly elections, the wake of incidents involving a breach of the Model Code of Conduct were at their peak.
• Other important issues highlighted in the letter included transfers of top officials, voter-verifiable paper audit trail (VVPAT) audits, violations of the MCC by Rajasthan Governor and Uttar Pradesh Chief Minister, and also corrosion of the political discourse in general.

Apart from the above issues, there are many others which were emerged during the 2019 general election and recent assemble elections

• It faced the wrath of political parties for acting in a biased manner in respect of Model Code of Conduct violations by some powerful leaders. It has been accused of being selective.
• It had no convincing logic for eight phase elections in West Bengal while there was a single phase in Tamil Nadu.

The above incident made the role of ECI doubtful a group of retired bureaucrats and diplomats wrote a recent letter to the President of India in the context of these incidents, expressed concern over the Election Commission of India (EC’s) “weak-kneed conduct” and its institution credibility.

WHAT ARE THE POSSIBLE REFORMS TO MAKE THE ECI CREDIBLE AND INDEPENDENT?

STEPS NEEDED: A SELECTION PANEL FOR APPOINTMENT

EXPLANATIONS: Like CVC, CBI, NHRC, LOK PAL, etc, the ECI should also have a selection panel for greater transparency in an appointment.

STEPS NEEDED: RECOMMENDATIONS ON THE COMPOSITION OF THE PANEL

EXPLANATIONS: A 2015 Law Commission report on electoral reforms says the Constituent Assembly did debate the process of appointment of the CEC and ECs during which a suggestion to subject such appointments to confirmation by a two-thirds majority in the Parliament was made. However, a joint session of the Parliament rejected it and left the option open for the Parliament to make appropriate legislation. In 1990, the Goswami Committee report suggested that the CEC should be appointed by the President in consultation with the Chief Justice of India and the Leader of the Opposition in the Lok Sabha; The Second Administrative Reforms Commission of 2007 too backed a similar arrangement: A collegium consisting of the Prime Minister, Lok Sabha Speaker, Leader of Opposition in Lok Sabha, Law Minister and Deputy Chairman of Rajya Sabha should make recommendations to the President for an appointment. In 2015, the Law Commission also proposed a three-member collegium consisting of the Prime Minister, Leader of the Opposition in Lok Sabha, and Chief Justice of India for such appointments. It provided a comparative picture: In the US, the federal election commissioners are appointed by the President with the advice and consent of the Senate; in Canada, they are recommended by a House of Commons resolution and in South Africa by the National Assembly.

STEPS NEEDED: AN INDEPENDENT SECRETARIAT

EXPLANATIONS: Another key reform would be to provide the ECI with a permanent and independent secretariat to protect its staff from various pulls and pressures from the executive. It does have a separate secretariat, but its senior officials, including Deputy Election Commissioners and DG level officers, are drawn from civil services belonging to different states and are on deputation for a limited period. Only the lower-level officials are permanent staff from their own rank. The Goswami Committee recommended an arrangement similar to that of the Lok Sabha/Rajya Sabha secretariat provided in Article 98(2), which permits the Parliament to regulate the recruitment and service conditions of persons appointed to the secretarial staff in either House of Parliament.

STEPS NEEDED: PROTECTIONS TO ECS ON PAR WITH CEC

EXPLANATIONS: It has also become necessary to look at the process of removal of the ECS. While Article 324 (5) provides protection to the CEC by saying that his/her removal from office shall be on “like manner and on the like grounds as a Judge of the Supreme Court” and “the conditions of service of the Chief Election Commissioner shall not be varied to his disadvantage after his appointment”, no such protections are available to the ECS. They are at the mercy of the government and CEC. Extending the constitutional protections available for the CEC to the ECs become significant in the light of a public spat between the CEC Sunil Arora and EC Ashok Lavasa over clean chits given selectively to some political leaders over poll code violations and non-inclusion of dissent notes in the official orders.

WAY FORWARD

Re-inventing consistently: EC should continuously re-invent its powers given to it under Indian Constitutions as done by many previous CECs like T. N. Seshan. It is a constitutional body, which makes it one of the most powerful bodies in India.

Recognizing the diversification of campaign media: Recognising the diversification of campaign media is the first step towards addressing the rampant flouting of the MCC. The framework for understanding and addressing the various forms of voter manipulation must be fundamentally reimagined by the ECI.

Voter Awareness: Voter Awareness is an ultimate and effective solution, which makes candidates more accountable to their voters and stop flouting the MCC every now and then. EC has launched voter awareness campaigns like SVEEP. It has also made people as participants remain vigilant in the polling process through cVigil App where anyone can upload election malpractices.

Amending the appointment and removal process of ECs: Government should consider the recommendations by ARC-II and Law Commission reports regarding the changes required in the appointment and removal of ECs and make it stronger.