DAILY CURRENT AFFAIRS (JULY 04, 2022)

THE HEALTH AND SOCIAL ISSUES

EXPLAINED: WHAT IS ANTHRAX, THE INFECTIOUS DISEASE FOUND IN KERALA?

THE CONTEXT: After finding several carcasses of wild boar, Kerala health officials confirmed the presence of anthrax, a serious infectious disease caused by spore-forming bacteria, in Athirappilly of Thrissur district.

THE EXPLANATION:

Anthrax has usually been found in India’s southern states and is less frequently found in the northern states. Over the past years, it has been reported in Andhra Pradesh, Jammu and Kashmir, Tamil Nadu, Assam, Odisha and Karnataka.

What is Anthrax?

  • Anthrax, also known as malignant pustule or woolsorter’s disease, is a rare but serious disease caused by rod-shaped bacteria known as Bacillus anthracis. It occurs naturally in soil and, according to the WHO it is primarily a disease of herbivores, with both domestic and wild animals being affected by it.
  • Anthrax is a zoonotic disease, meaning that it is naturally transmissible from animals (usually vertebrae) to humans. People can get the disease through contact with infected animals or animal products that are contaminated with bacteria.
  • According to the WHO, Anthrax is generally regarded as non-contagious. There have been instances of person-to-person transmission, however, such instances are extremely rare.

How do animals get Anthrax?

  • Domestic and wild animals can get infected when they breathe in or ingest spores in contaminated soil, plants or water.
  • According to the Ministry of Health and Family Welfare’s National Health Portal, Herbivorous animals can get the disease through contaminated soil and feed, while omnivorous and carnivorous animals get infected through contaminated meat, bones and other feeds. Wild animals get sick through feeding on anthrax-infected carcasses.

How do humans get infected?

  • Humans almost always contract the disease directly or indirectly from animals or animal products.
  • People get infected with anthrax when spores enter the body, through breathing, eating contaminated food or drinking contaminated water, or through cuts or scrapes in the skin. The spores then get “activated” and multiply, spreading across the body, producing toxins and causing severe illness.

Use in Bioterrorism:

  • Anthrax has been used in biological warfare by agents and by terrorists to intentionally infect.
  • It was spread in the US through mail. It killed 5 people and made 22 sick.

THE ENVIRONMENT AND ECOLOGY

EXPLAINED: HOW KERALA HAS STRUGGLED TO IDENTIFY BUFFER ZONES AROUND ITS PROTECTED FORESTS

THE CONTEXT: Recently, the three-judge bench of the Supreme Court, in its order on (June 3, 2022) said national parks, wildlife sanctuaries and such protected forests must have an ESZ of a minimum 1 km from their boundaries.

THE EXPLANATION:

  • The court said the guidelines issued by the Ministry of Environment, Forest and Climate Change (MEF & CC) on 9 February 2011, which have either banned or regulated a bunch of activities within the ESZ, should be strictly adhered to.
  • In 2011, the environment ministry had issued a set of guidelines, which either completely banned or regulated certain activities in ESZ. The banned activities are mining, running of sawmills, polluting industries, commercial use of fire woods, mega hydel-power projects and manufacturing of hazardous objects. Mining would be allowed only for local use, the guidelines said.
  • The permissible activities are ongoing agricultural and horticulture practices, rainwater harvesting, organic farming and the adoption of green technology for all activities.

About ESZs:

  • Eco-Sensitive Zones (ESZs) or Ecologically Fragile Areas (EFAs) are areas notified by the MoEFCC around Protected Areas, National Parks and Wildlife Sanctuaries.
  • The purpose of declaring ESZs is to create some kind of “shock absorbers” to the protected areas by regulating and managing the activities around such areas.
  • They also act as a transition zone from areas of high protection to areas involving lesser protection.
  • The Environment (Protection) Act, 1986 does not mention the word “Eco-Sensitive Zones”.
  • An ESZ could go up to 10 kilometres around a protected area as provided in the Wildlife Conservation Strategy, 2002.
  • Moreover, in the case where sensitive corridors, connectivity and ecologically important patches, crucial for landscape linkage, are beyond 10 km width, these should be included in the ESZs.

Significance of ESZ:

  • The purpose of declaring ESZs around national parks, forests and sanctuaries is to create some kind of a “shock absorber” for the protected areas.
  • These zones would act as transition zone from areas of high protection to those involving lesser protection.

VALUE ADDITION:

SIGNIFICANCE OF WESTERN GHATS:

  • Older than the Himalayan mountains, the mountain chain of the Western Ghats represents geomorphic features of immense importance with unique biophysical and ecological processes.
  • The site’s high montane forest ecosystems influence the Indian monsoon weather pattern. Moderating the tropical climate of the region, the site presents one of the best examples of the monsoon system on the planet.
  • It also has an exceptionally high level of biological diversity and endemism and is recognized as one of the world’s eight ‘hottest hotspots’ of biological diversity.
  • The forests of the site include some of the best representatives of non-equatorial tropical evergreen forests anywhere and are home to at least 325 globally threatened flora, fauna, bird, amphibian, reptile and fish species

Connect the Dots:

  • Madhav Gadgil and Kasthurirangan Committees are related to the Western Ghats.

EXPLAINED: IS GROWING SPACE TOURISM POSING A RISK TO THE CLIMATE?

THE CONTEXT: Recently, an article published in the journal, Earth’s Future wherein researchers from University College London (UCL), the University of Cambridge and Massachusetts Institute of Technology (MIT) found that the soot emissions from rocket launches are far more effective at warming the atmosphere compared to other sources.

THE EXPLANATION:

  • The researchers state that routine launches by the rapidly growing space tourism industry “may undermine progress made by the Montreal Protocol in reversing ozone depletion.”
  • They argue that there is an urgent need for environmental regulation to reduce the climatic damage from this fast-growing industry.

Space tourism industry

  • According to the authors of the recent study published in Earth’s Future, “The space industry is one of the world’s fastest-growing sectors”.
  • From $350 million in 2019, the industry is forecasted to grow to more than $1 trillion by 2040. With companies like Virgin Galactic, SpaceX and Blue Origin launching commercial space flights, space tourism has become, at least theoretically, a possibility for enthusiasts.

What are the study’s findings?

  • Unlike other sources of pollution, the study finds that environmental damage caused by rockets is far greater, as they emit gaseous and solid chemicals directly into the upper atmosphere.
  • The space tourism’s current growth trends also indicate a potential for the depletion of the ozone layer above the Arctic. This is because the pollutants from rocket fuel and heating caused by spacecraft returning to Earth, along with the debris caused by the flights are especially harmful to the ozone layer.
  • What is of great concern is the black carbon (BC) soot that is emitted by rockets directly into the atmosphere. These soot particles have a far larger impact on the climate than all other sources of soot combined, as BC particles are almost 500 times more efficient at retaining heat.
  • “Soot particles from rocket launches have a much larger climate effect than aircraft and other Earth-bound sources, so there doesn’t need to be as many rocket launches as international flights to have a similar impact. According to researchers, what we really need now is a discussion amongst experts on the best strategy for regulating this rapidly growing industry”.
  • The team of researchers showed that within only 3 years of additional space tourism launches, the rate of warming due to the released soot would more than double.
  • This is because of the use of kerosene by SpaceX launches and hybrid synthetic rubber fuels by Virgin Galactic.

Undermining Montreal Protocol

  • While the loss of ozone from current rocket launches is “small”, the researchers argue that in the likelihood of weekly or daily space tourism rocket launches, the recovery of the ozone layer caused by the Montreal Protocol could be undermined.
  • Researchers also noted, “The only part of the atmosphere showing strong ozone recovery post-Montreal Protocol is the upper stratosphere, and that is exactly where the impact of rocket emissions will hit hardest.

VALUE ADDITION:

MONTREAL PROTOCOL

  • The Montreal Protocol is a landmark international treaty that was adopted in Montreal in 1987 and was aimed at protecting the Earth’s ozone layer by regulating the production and consumption of nearly 100 chemicals called ozone-depleting substances (ODS).
  • The treaty phases down the consumption and production of various ODS in a stepwise manner.
  • As per the Montreal Protocol, developing and developed countries have equal and differentiated responsibilities, however all countries have to follow binding, time-targeted and measurable commitments.
  • Considered to be one of the most successful environmental interventions on the global scale, it is the first treaty to achieve universal ratification by all countries in the world.
  • The United Nations Environment Programme (UNEP) states that without this treaty, ozone depletion would have increased by more than ten times by 2050, as compared to current levels.

THE PRELIMS PERSPECTIVE

MAYURBHANJ’S SUPERFOOD ‘ANT CHUTNEY’ READY FOR GI-TAG

THE CONTEXT: In Odisha, scientists are now fine-tuning their research to make a presentation for the Geographical Indications (GI) registry of Kai chutney.

THE EXPLANATION:

  • Applied under food category, the GI tag will help develop a structured hygiene protocol in the preparation of Kai chutney for standard wider use. Geographical Indications labels enhance the reputation and value of local products and support local businesses.
  • People often keep a safe distance from red weaver ants as their sting inflicts a sharp pain and reddish bumps on the skin. Despite this, weaver ants are popular among the tribes of the Mayurbhanj district in Odisha for the mouth-watering dish made of them — the Kai chutney.
  • This savoury food item, rich in proteins, calcium, zinc, vitamin B-12, iron, magnesium, potassium, sodium, copper, fibre and 18 amino acids, is known to boost the immune system.
  • Weaver ants, Oecophylla smaragdina, are abundantly found in Mayurbhanj throughout the year. They make nests with leaves of host trees.

VALUE ADDITION:

About GI tag:

  • A GI is primarily an agricultural, natural or manufactured product (handicrafts and industrial goods) originating from a definite geographical territory.
  • Typically, such a name conveys an assurance of quality and distinctiveness, which is essentially attributable to the place of its origin.

Security:

  • Once the GI protection is granted, no other producer can misuse the name to market similar products. It also provides comfort to customers about the authenticity of that product.

Who is a registered proprietor of a geographical indication?

  • Any association of persons, producers, organisation or authority established by or under the law can be a registered proprietor.
  • Their name should be entered in the Register of Geographical Indication as registered proprietor for the Geographical Indication applied for.

How long the registration of Geographical Indication is valid?

  • The registration of a geographical indication is valid for a period of 10 years. Also, It can be renewed from time to time for further period of 10 years each.
  • In India, Geographical Indications registration is administered by the Geographical Indications of Goods (Registration and Protection) Act, 1999 which came into force with effect from September 2003. The first product in India to be accorded with GI tag was Darjeeling tea in the year 2004-05.

EXPLAINED: WHY AUSTRALIA HAS HAD TO KILL MILLIONS OF BEES TO SAVE ITS HONEY INDUSTRY

THE CONTEXT: The recent outbreak of the deadly varroa mite, a sesame seed-sized parasite that was first spotted at a port near Sydney, Australia poses a massive threat to the country’s multimillion-dollar honey industry.

THE EXPLANATION:

  • Recently, Australia was one of the few countries that was able to successfully clamp down on the spread of Varroa mite-induced plagues, known to be the biggest threat to bees worldwide.
  • According to the Australian Honeybee Industry Council, Colonies of honeybees have been put under “lockdown” as part of a wide range of biosecurity measures to limit the outbreak. “It is critically important that beekeepers in the Newcastle area do not move any hives or equipment in or out of the area”.

What is the Varroa mite?

  • The Varroa mite, or Varroa destructor, is a parasitic insect that attacks and feeds on honeybees. Reddish-brown in colour, the tiny pests are known to kill entire colonies of honeybees. They often travel from bee to bee and also via beekeeping equipment, such as combs that have been extracted.
  • The spread of the mite is largely blamed for a sharp decline in the number of honeybee colonies worldwide. It has plundered bee colonies across the globe.
  • According to Australian beekeeping website Bee Aware “Although Varroa mites can feed and live on adult honeybees, they mainly feed and reproduce on larvae and pupae in the developing brood, causing malformation and weakening of honey bees as well as transmitting numerous viruses.”

Why do bees’ matter?

  • According to a report, the latest lockdown could adversely impact the growth of several crops — including almonds, macadamia nuts and blueberries — that are dependent on hives for pollination.

THE MISCELLANEOUS

EXPLAINED: ARE HUMANS OLDER THAN WE THOUGHT? EXPLAINING THE STUDY OF THE SKELETAL REMAINS FROM SOUTH AFRICA

THE CONTEXT: According to a new study published in the journal Proceedings of the National Academy of Science, the fossils of our earlier human ancestors, located in a cave in South Africa, is a million years older than previously understood.

THE EXPLANATION:

The researchers analysed the fossilised remains of Australopithecus from Sterkfontein caves and argued they lived at the same time as their East African counterparts like the famous Lucy, complicating the way scholars have understood human evolution.

What is Australopithecus?

  • Australopithecus, meaning “southern ape”, was a group of hominins or now-extinct early humans, that was closely related to and almost certainly the ancestors of modern humans.
  • They inhabited the planet 4.4 million to 1.4 million years ago, likely encompassing a time period longer than our own genus, Homo. Their fossils have been found across sites in eastern, northern, central and southern Africa.
  • Australopithecus was originally defined by the anthropologist Raymond Dart in 1925, after the discovery of the first australopith fossil (a small child’s skull) in Tuang, South Africa. Through his research, Dart argued that early humans first evolved in Africa, challenging the conventional wisdom that they had done so in Europe and Asia.
  • Our early ancestors were bipedal in nature and travelled on the ground (but used trees for food and protection), had large teeth with thick enamel caps for chewing, and their brains were only slightly larger than apes. The facial and dental features suggest that they were able to consume tough foods, such as nuts, seeds, tubers and roots.
  • They stood at a height of around 3 ft 9 inches to 4 ft 11 inches, and likely weighed around 30 to 50 kg, with males almost double the size of females.

What are the Sterkfontein caves?

The “Cradle of Humankind” is a 47,000-hectare paleoanthropological site, declared a World Heritage Site by UNESCO. Located 40 km northwest of Johannesburg, it contains a complex system of limestone caves, where a significant number of hominin fossils have been found.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY

Q.The Athirappilly Falls is located in which state?

a) Kerala

b) Tamil Nadu

c) Karnataka

d) Maharashtra

 

ANSWER FOR 2ND JULY 2022

Answer: D




Ethics Through Current Development (04-07-2022)

  1. Technology is no panacea for custodial deaths READ MORE
  2. How we sow and reap our samskaras READ MORE
  3. Gratitude is Beatitude READ MORE




Today’s Important Articles for Geography (04-07-2022)

  1. Monsoon: Continued vigilance is needed READ MORE
  2. Plastic ban: There may be issues but the well-intentioned move to ban SUP mustn’t end up badly READ MORE
  3. Whither Justice: While COP26 had managed to achieve significant procedural and institutional outcomes, it had fallen short of achieving substantive outcomes which could reflect the imperative of climate justice. READ MORE



Today’s Important Articles for Sociology (04-07-2022)

  1. The post-pandemic global inequality boomerang READ MORE
  2. Inclusive social protection READ MORE



Today’s Important Articles for Pub Ad (04-07-2022)

  1. Why is defection a non-issue for voters? Indian voters are divided on what kind of representatives they prefer voting for READ MORE
  2. Technology is no panacea for custodial deaths READ MORE
  3. Reimagining the post-pandemic world READ MORE



WSDP Bulletin (04-07-2022)

(Newspapers, PIB and other important sources)

Prelim and Main

  1. Restoring the Sun temple’s exquisite carvings READ MORE
  2. Explained | The functioning of the National Investigation Agency READ MORE
  3. Celebrating the unknown, the unsung, and the underappreciated READ MORE
  4. With GI tag, Mayurbhanj’s superfood ‘ant chutney’ set to find more tables READ MORE
  5. NATO Invites Finland, Sweden to Join, Says Russia Is a ‘Direct Threat’ READ MORE
  6. La Niña Likely To Enter ‘Extremely Unlikely’ Third Year. What Must India Do? READ MORE
  7. UN Ocean Conference: 198 countries adopt Lisbon Declaration READ MORE
  8. Under the revised rule, individuals now have 90 days to inform the govt. if the amount exceeds READ MORE
  9. India’s Gig Economy to Expand to 2.35 Crore Workers by 2029-30: Niti Aayog READ MORE

Main Exam   

GS Paper- 1

  1. The Simla Agreement: An imperfect peace READ MORE
  2. Monsoon: Continued vigilance is needed READ MORE
  3. The post-pandemic global inequality boomerang READ MORE

GS Paper- 1

POLITY AND GOVERNANCE

  1. Why is defection a non-issue for voters? Indian voters are divided on what kind of representatives they prefer voting for READ MORE
  2. Technology is no panacea for custodial deaths READ MORE
  3. Reimagining the post-pandemic world READ MORE

SOCIAL ISSUES AND SOCIAL JUSTICE

  1. Inclusive social protection READ MORE

INTERNATIONAL ISSUES

  1. The West Asia pivot: India must persist in its attempt to experiment with policy changes READ MORE
  2. G7 infra plan a lifeline developing nations can’t ignore but first crack this code, like BRI READ MORE
  3. India, BRICS in Cold War Conditions READ MORE

GS Paper- 1

ECONOMIC DEVELOPMENT

  1. Dogged by inflation: Policymakers must focus on easing price pressures so as not to derail recovery READ MORE
  2. Why rice and wheat bans aren’t the answer to inflation READ MORE
  3. Farm reforms need a GST-like council READ MORE
  4. India faces sharp fiscal deficit slippage READ MORE
  5. Why the rupee’s ‘record low’ is not necessarily a cause for concern READ MORE

ENVIRONMENT AND ECOLOGY

  1. Plastic ban: There may be issues but the well-intentioned move to ban SUP mustn’t end up badly READ MORE
  2. Whither Justice: While COP26 had managed to achieve significant procedural and institutional outcomes, it had fallen short of achieving substantive outcomes which could reflect the imperative of climate justice. READ MORE

SCIENCE AND TECHNOLOGY

  1. 10 Years of the Higgs Boson: How Far Have We Come, and What Next? READ MORE

GS Paper- 1

ETHICS EXAMPLES AND CASE STUDY

  1. Technology is no panacea for custodial deaths READ MORE
  2. How we sow and reap our samskaras READ MORE
  3. Gratitude is Beatitude READ MORE

Questions for the MAIN exam

  1. ‘Technology may make policing more convenient, but it can never be an alternative for compassionate policing established on trust between the police and the citizens. Discuss the statement in light of the use of AI and Machine Learning in policing in recent times.
  2. ‘While COP26 had managed to achieve significant procedural and institutional outcomes, it had fallen short of achieving substantive outcomes which could reflect the imperative of climate justice’. Comment on the statement in light of COP 26 outcomes.
  3. ‘Fairness in governance is guaranteed only when there is a suitable constitutional climate’. Comment on the statement.
  4. ‘The Constitution works not merely through its institutions. It works through the people’. Discuss the statement.

QUOTATIONS AND CAPTIONS

  • It is not enough to stare up the steps, we must step up the stairs.
  • Evidence from the National Election study indicates that the views of Indian voters are divided on what kind of representatives they would prefer to vote for.
  • While COP26 had managed to achieve significant procedural and institutional outcomes, it had fallen short of achieving substantive outcomes which could reflect the imperative of climate justice.
  • Technology can never be an alternative to compassionate policing based on trust between the police and citizens.
  • Custodial deaths are common despite enormous time and money being spent on training police personnel to embrace scientific methods of investigation. This is because police personnel are humans from different backgrounds and with different perspectives.
  • Technology may make policing more convenient, but it can never be an alternative for compassionate policing established on trust between the police and the citizens.
  • Policymakers must focus on easing price pressures so as not to derail the recovery.
  • Abrupt export bans inflict high costs on poorer nations. India’s agri-trade policies need to be predictable, rather than a result of knee-jerk reactions.
  • The State and analysts must keep a keen eye on the monsoon because even a normal monsoon can be skewed in terms of geography and time, wreaking havoc on cropping patterns.
  • Global inequality has fallen over the last three decades, despite a rise in inequality within some countries.
  • India is not in the US scheme of things for the region and unless New Delhi pulls itself up by its bootstraps, its recent gains in the Arab world and Israel will gradually evaporate.
  • International crude and fertiliser prices disturbed Government’s budget calculations; welfare expenses are adding to fiscal stress.
  • Right to property, though not a fundamental right after deletion of Article 19(1)(f) of the Constitution, remains a constitutional right by virtue of Article 300A. In a demolition drive, it is also one’s right to equality, freedom and dignified life that is done away with.
  • Political power is often dangerously inhuman, and the Constitution aims to tackle this human destiny. Fairness in governance is guaranteed only when there is a suitable constitutional climate. The Constitution works not merely through its institutions. It works through the people.

Essay topic

  • Gratitude is Beatitude.

50 WORD TALK

  • The severe setback to the idea of the rule of law in contemporary India is essentially a setback to its constitutional culture. A house is not merely a property. It is life and livelihood. It hosts the wisdom of the old and the innocence of the children. It has, in it, the infiniteness of love, peace, and togetherness. A house is a unit of the nation. Therefore, every unfair demolition is a blow to our republic.



TOPIC: SUPREME COURT RULING ON GST COUNCIL

THE CONTEXT: The Supreme Court ruled on 19 May 2022, that recommendations of the Goods and Services Tax (GST) Council only have persuasive value, and cannot be binding on the Centre and states. Supreme Court also held that Union and State legislatures have equal, simultaneous and unique powers to make laws on Goods and Services Tax (GST) and the recommendations of the GST Council are not binding on either the Union government or the states.

BACKGROUND

  • The ongoing discords between the Centre and states over issues ranging from the allocation of financial resources to fixing of Goods and Services Tax (GST) rates has once again brought to the fore issues pertaining to our federal structure, the resolution of which is essential for the country’s growth. The traditional approach to federalism that sees competition and cooperation at loggerheads is no longer relevant in the post-1990s scenario. A combination of cooperative and competitive spirit ensures the economic prosperity and welfare of the nation in an equal and equitable manner.
  • The apex court’s decision came while confirming a Gujarat High Court ruling that the Centre cannot levy Integrated Goods and Services Tax (IGST) on ocean freight from Indian importers. The Supreme Court has held that GST on ocean freight paid in case of import of goods is unconstitutional.

THE CASE

  • Mohit Minerals had filed a writ petition before the Gujarat High Court challenging notifications levying IGST on the ground that customs duty is levied on the component of ocean freight and the levy of IGST on the freight element in the course of transportation would amount to the double taxation.
  • The Union of India argued before the High Court that although tax is being paid twice on the value of ocean freight, it is not unconstitutional as the tax is on two different aspects of the transaction, namely, the supply of service and import of goods.
  • The Gujarat High Court had quashed the levy of Integrated GST (IGST) on the component of ocean freight paid by a foreign seller to a foreign shipping line, on a reverse charge basis.
  • The SC dismissed the Revenue Department’s special leave petition challenging the Gujarat HC order that had gone in favour of taxpayers. (Union of India and Anr versus M/s Mohit Minerals Through Director)

SUPREME COURT RULING

COOPERATIVE FEDERALISM: The Supreme Court in a judgment championing the importance of “cooperative federalism” for the well-being of democracy, held that Union and State legislatures have “equal, simultaneous and unique powers” to make laws on Goods and Services Tax (GST).

COLLABORATIVE DIALOGUE: The recommendations of the GST Council are the product of a collaborative dialogue involving the Union and the states.

RECOMMENDATIONS ONLY RECOMMENDATORY IN NATURE:

  • They are recommendatory in nature.
  • The recommendations only have a persuasive value and the recommendations of the GST Council are not binding on them.
  • To regard them as binding would disrupt fiscal federalism when both the Union and the states are conferred equal power to legislate on GST.

ARTICLE 246A

  • The court emphasized that Article 246A of the Constitution (122nd constitutional amendment) treats the Union and the States as “equal units”.
  • Article 246A of the Indian Constitution gives the States the power to make laws with respect to GST.

ARTICLE 279A: Article 279A (constituting the GST Council) envisions that neither the Centre nor the states are actually dependent on each other.

SIGNIFICANCE OF THE SUPREME COURT RULING

  • The order has reminded the States that they can reject decisions made by the GST Council and set different rates for goods and services in their jurisdiction. The point to note is that the Court has only highlighted what was already in the Constitution.

 THE ORDER AND DISRUPTION TO THE FUNCTIONING OF THE GST REGIME

  1. If a State remains in the GST system but sets higher tax rates on a few goods and services: This will mean that taxpayers will be unable to claim the input tax credit on the goods outside GST, increasing their tax incidence. Taxpayers’ compliance burden for return filing will get very troublesome. Besides, higher tax rates will make the State less preferred by domestic and foreign companies.
  2. If the State moves out of the GST system completely: there will be complete chaos. Other States will not want to share their GST revenue with the breakaway State, thus bringing down their revenue share from the Centre. Inter-State business with the breakaway State will collapse and FDI will move away from the State.

 IMPACT OF THE SUPREME COURT RULINGS

  1. Increase in bargaining strength of the states: It paves the way for more intensive bargaining and negotiations, placing states on an equal footing with the Centre in taking decisions on the structure and operations of the tax regime.
  2. The immediate impact of this will be on bargaining by states for extending the period of compensation for the loss of revenue. The five-year period of compensation gets over at the end of June 2022. States have therefore been demanding the extension of the compensation period by another two-three years and this decision will now help the states to bargain hard for the extension.
  3. This judgement may change the landscape of those provisions under GST which are subject to judicial review. This is because the constitutionality of such provisions can be challenged based on GST Council recommendations.
  4. The judgment also resolved a prolonged battle the government has been raging against companies to implement its IGST on ocean freight on a reverse charge basis. The decision will foster the spirit of cooperative federalism by emphasizing the importance of cooperative federalism as a vital component of democracy’s well-being.
  5. Currently, filing of returns, availing of input tax credits, issuance of notices, refund claims, etc, are all being undertaken through the common GSTN platform. It could be a Herculean or near-impossible task to operate in an environment where there are different laws and rates.
  6. This might open a Pandora’s Box, allowing the states to have amendments specific to their legislation. This could lead to a loss in uniformity and wreck the very foundation of the GST regime.

OTHER CHALLENGES WITH GST

TAX UNILATERALISM

  • Cess revenue is not shared with states.
  • Close to 18 per cent 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.

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.

CONSTITUTIONAL

  • States’ fiscal autonomy is undermined as the GST Council instead of being just a recommendatory body was trying to influence the decisions of the state.

ADMINISTRATIVE

  • GST Implementation Committee ( civil servants/bureaucrats) monitor the implementation of the GST Council decisions and recommendations, but the states have declined to adhere to such orders which have not been made by the council and are given by the committee.

279A (11)

  • There is a constitutional provision for creating an Appellate Tribunal, which has not yet been made.

THE WAY FORWARD:

  1. The spirit of cooperative federalism is already entrenched in GST. The Court has not brought about any change to the law. The States and the Centre need to keep the spirit going to ensure that the GST system functions. Despite having a brute majority, the Centre should pay heed to the problems faced by States and suggest corrective measures, whenever possible.
  2. The Council should transcend the political rivalries of the day. The States should have the right to dissent in the Council and their voice should not be drowned in the pursuit of unanimity in decision-making.
  3. A Reformed Approach toward States: The Centre could strive to be more conciliatory toward States’ concerns and fiscal dilemmas. The Council should also meet more often to nurture the critical fiscal federalism dialogue in the right direction and minimize trust deficits.
  4. There are many pending reforms that require the Centre to work more cohesively with States to take India’s economy forward and lift those left behind – land, labour markets as well as the agrarian sector.
  5. Horizontal and Vertical Level Cooperation: Cooperation between the Centre and states is required at both vertical (between Centre and states) and horizontal (among states) levels and on various fronts. This includes fine-tuning developmental measures for desired outcomes, development-related policy decisions, welfare measures, administrative reforms, strategic decisions, etc.
  6. Reforms in GST Council: It may be time already for reform of the GST. What is needed is statesmanship at the GST Council even if the Court has said that the Council is a place as much for political contestation as for cooperative federalism.
  7. The centre shall promote decisions in the GST Council to be made on consensus building, adhering to the ideals of cooperative federalism; constitutional crises shall be avoided by respecting the fiscal autonomy of the state legislatures.

THE CONCLUSION: As the court has gone ahead to categorically hold that the GST Council recommendations have only persuasive value, there will be a pragmatic approach to the provisions which are subject to judicial review by way of challenge to the constitutionality of such provisions based on GST Council recommendations.

Adoption of best practices and implementation of reforms at the ground level would positively impact the ease of doing business for MSMEs. This would raise India’s manufacturing capacity to the next level and radically transform India’s growth story. The rise in economic activities would result in higher GST collection and thereby boost the government’s welfare measures. Competition among states along with hand-holding by the Centre has the potential to enable the realization of the goal of a five-trillion economy by 2024.

Mains Practice Questions:

  1. Explain the rationale behind the Goods and Services Tax (Compensation to States) Act of 2017. How has COVID-19 impacted the GST compensation fund and created new federal tensions?
  2. Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India in July 2017.
  3. Explain the salient features of the Constitution (One Hundred and First Amendment) Act, 2016. Do you think it is efficacious enough ‘to remove cascading effect of taxes and provide for the common national market for goods and services?
  4. India can only achieve its ambitious growth targets by enhancing competitiveness at all levels of government. Critically analyse.

Sources

BACK TO BASICS

ABOUT GOODS AND SERVICES ACT

  • It is a constitutional body under Article 279A.
  • Article 279A empowered the President to constitute a GST Council by order.
  • It makes recommendations to the Union and State Government on issues related to Goods and Service Tax and was introduced by the Constitution (101st Amendment) Act, 2016.
  • The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in charge of Finance or Taxation of all the States.
  • The Union Revenue Secretary acts as the ex-officio Secretary to the council.
  • It is considered as a federal body where both the centre and the states get due representation.
  • Every decision of the Goods and Services Tax Council shall be taken at a meeting by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles:
  • the vote of the Central Government shall have a weightage of one third of the total votes cast, and
  • the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
  • The GST Council is hailed for its cooperative federalism which brings together the Centre and States on key policy decisions.

GST COMPENSATION TO STATES

 How is it funded?

In order to mobilise resources for compensation, a cess is being levied on such goods, as recommended by the Goods and Services Tax Council, over and above the GST on that item. It is called compensation cess. To date, compensation cess is levied on products such as pan masala, tobacco, aerated waters and motor cars apart from coal.

 Who pays compensation to whom? When?

The consumer is required to pay for compensation. It is collected by the Centre which releases it to States. The proceeds of the compensation cess will be credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund in the public account. All amounts payable to the States as compensation will be released bi-monthly, provisionally, from said fund against figures given by the Central accounting authorities. Final adjustments will be done after receiving audited accounts of the year from the Comptroller and Auditor General of India.

Why are States demanding an extension of the compensation?

States say their revenue situation is yet to improve on two counts — due to the introduction of the GST and because the pandemic has affected revenue collection. At the same time, their expenses have gone up and they expect higher deficit as revenue growth is low. Considering all these, States are seeking an extension of compensation for five more years. Any decision, in this regard, has to be taken by GST Council.




Day-236 | Daily MCQs | UPSC Prelims | POLITY

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