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GS 2

Government policies


Letting go of instant triple talaq: (The Hindu, Editorial)

Context:

The All India Muslim Personal Law Board (AIMPLB), though its counsel Kapil Sibal, informed the Supreme Court that it was considering reforms and the gradual giving up of triple talaq but wanted time for it.

Reforms mentioned:

  • The board asking all qazis to advise the husbands, while finalizing the marriage contract, not to resort to instant divorce unless under compelling circumstances.
  • The “compelling circumstances”, however, were not defined.

Past incidences:

  • In July 2004, in its executive committee meeting in Kanpur, the board was widely expected to outlaw instant talaq. But nothing came out of it.
  • Muslim women were let down once again in May 2005 when the board’s much-hyped ‘model nikahanama’ released in Bhopal turned out to be a damp squib.

Reasons for rigidity:

  • The rigidity stems from two concepts namely taqleed (uncritical acceptance of a school) and tamazzhub(idealization of a school) wherein precedence is given to one legal school (mazhab)over the rest.
  • In taqleed, the adherents just follow their school uncritically even if they don’t elevate it above others
  • A subdued emphasis on tamazzhub, and an overt expression of taqleed, is clearly visible in note on arguments submitted to the Supreme Court wherein the issue of instant talaq is reduced to a  question of whether or not it is part of the Hanafi faith because more than 90% of Indian Muslim are Hanafis.

Key points:

  • The founder of Hanafi school, Imam Abu Hanifa, was  himself a model of independent reasoning (ijtihad) and flexibility.
  • He introduced the concept of istihsan, which helps jurists depart from the existing precedent by taking decision from those of similar cases, for reasons stronger than those obtained in the past cases.

International groupings and agreements


ASEAN, 50 years on: (The Hindu, Editorial)

Context

  • The Association of Southeast Asian Nations (ASEAN) can look back with optimism on its incremental record on regional integration on the 50th anniversary of its founding on 8th August.

The policy of non-interference

  • The original policy of non-interference in the internal affairs of member states was noteworthy.
  • But over the years, there has been growing appreciation that non-interference, if perceived as indifference, entails political cost, impeding more substantial engagement.
  • There has been recognition that the bloc’s expansion to cover ten countries, with highly diverse economic, political and cultural moorings, calls for a greater convergence of policies and more coordinated action.
  • China and India’s emergence as major economic powers has lent greater urgency to trade liberalization.
  • It then in 2007 led to adopting a legal charter with a mandate to establish free movement of goods, services, capital and skilled personnel by ASEAN.
  • With the 2015 launch of the ASEAN Economic Community, the bloc is on the threshold of realizing its ambition of emerging as an integrated single market and to engage the rest of the world with a unified voice.
  • Still there is little noticeable action on the ground in relation to reduction of tariffs, and intra-regional trade.

Comparison with European Union (EU)

  • The relatively slow pace of economic integration in the group, compared to the European Union is inherent.
  • The result was the establishment of transnational bodies, with definite powers of oversight, by pooling sovereignty among nations in the case of EU.
  • Contrariwise, except Thailand, the other original constituents of ASEAN had just emerged from colonialism as newly independent nation states.
  • Defending their sovereignty was bound to be a high priority for them during the Cold War, while their leaders were alive to the need to promote their collective security through a common framework.
  • ASEAN’s integration depends on deepening its democratic institutions.

Planes missing, fruits to India rot in Kabul: (The Hindu)

Context:

  • Weeks after the India-Afghanistan air corridor trade project was launched, the project has run into rough weather.

Explanation:

  • The matters got worse when tonnes of fresh fruits, including apricots and melons, were left rotting at the Kabul airport.
  • The flight chartered by Afghanistan’s national carrier, Ariana airlines, on July 20, 2017 failed to arrive on time, and the fruits were not moved to cold storage.
  • Angered by the losses, traders, who say as much as 120 tonnes of fruits, are still waiting to be transported from the airport, demanded that the government take swift action or they would find it hard to continue exporting perishable produce to India.

The reason behind:

  • Among the issues, say exporters, is the lack of “cargo screening machines” that necessitates packaging and repackaging, and the lack of adequate cold storage facilities at the airport.
  • On the Indian side, traders say they worry about clearing the perishable goods quickly through Indian customs, and the process is yet to be streamlined.
  • Procedural delays were supposed to be sorted out within a month of the corridor starting, but there are yet to be resolved.

Doklam’s unintended consequence: (Indian Express, Editorial)

Context

  • If China makes no room for compromise, India will be forced to think about coping with its power, burying illusions of Asian solidarity.

The eventual outcome

  • Whatever the eventual outcome in Doklam, the current stand-off is bound to significantly alter Indian perceptions of China.
  • For one, the political goodwill in India towards China that was constructed over the last three decades will be increasingly difficult to sustain in the coming years.
  • For another, India, which long resisted the idea of balancing China, is likely to move inevitably in that direction.
  • India sees no reason to pick up a needless quarrel with a neighbour and rising power like China.
  • But Beijing might be terribly wrong in presuming that Delhi would simply fold up under pressure.
  • Pushed to a corner, India has every incentive to simply dig in. If China sees itself as an irresistible force today, India could well turn out to be that immovable object. There will be no happy ending for this confrontation.
  • One of the consequences of power asymmetry is the pressure on the weaker power to turn to balancing strategies.
  • Until now, India has deeply resisted walking down that road in the expectation that a reasonable accommodation of interests with China is possible.
  • If China makes it clear there is no room for compromises, India will have to turn to both internal and external balancing of China.
  • One of the unintended consequences for China from the Doklam crisis would be an India that is forced to think far more strategically about coping with China’s power.
  • For nearly a century, sentimentalism in Delhi about Asian solidarity and anti-imperialism masked the more structural contradictions with China.

GS 3

Indian Economy. Planning, Growth and Employment


GST ties Bengal’s traditional weavers in knots: (The Hindu)

Context:

  • The weavers in Bengal are facing severe inconveniences due to the confusion surrounding GST.

Explanation:

  • With the confusion on whether GST would be levied on their Tannt saris, business for weavers in Bengal has almost stopped over the past month.
  • However, five per cent GST has been imposed on cotton and yarn, raw materials for Taant saris.

The plight of the weavers:

  • They couldn’t buy yarn without going through the complicated billing process under GST.
  • If such a situation continues then they would have no option but to shut down my business
  • Moreover, the weavers are totally clueless about the fact that whether there is any GST on Taant saris as well as the process of billing under GST.
  • Under such circumstances, it had become extremely difficult for them to sell the saris at wholesale markets as well as to buyers from Bihar and Odisha as they were asking for bills prepared as per GST norms.

Cess limit on motor vehicles raised to 25%: (The Hindu)

Context:

The Goods and Services Tax Council (GST Council) , during its 20th meeting on Saturday, recommended that the Centre increase the maximum limit for the cess that can be levied on most motor vehicles from 15% to 25%.

Introduction:

  • The reason for this, according to GST Council’s Fitment Committee, was that the post-GST tax incidence on motor vehicles across most categories was significantly lower than the pre-GST tax.

Recommendations:

  • The GST Council recommended that the union government may move legislative amendments required for increase in the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703, including SUVs, to 25% instead of the present 15%.
  • However, the decision on when to raise the actual cess leviable on the same will be taken by the GST Council in due course.

Various Categories:

  • Category 8702 comprise “motor vehicles for the transport of 10 or more persons, including the driver
  • Category 8703 comprises “motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702) including station wagons and racing cares (other than cars for physically handicapped persons).

Key points:

  • The GST Council argued that the hike in the cess was justified as it only brought the current tax incidence in line with what existed before GST.
  • Net of 28% GST, to maintain the pre-GST tax incidence, the highest compensation cess rate required will be 26.5%, based on tax incidence estimated with reference to assessable estimated with reference to assessable value for exercise duty and dealer’s margin.

Raging rupee: (The Hindu, Editorial)

Context:

  • With the considerable good performance of the Indian rupee, The RBI should resist the exporters’ argument for making the rupee cheaper.

Current Scenario:

  • The Indian rupee has turned out to be one of the best-performing currencies in the world with a gain of well over 6% against the U.S. dollar this year to date.
  • In fact, the currency hit a two-year high of 63.60, supported by strong inflows of foreign capital.

The concern:

  • Worries about the impact of a strong rupee on exports have risen — particularly in sectors such as pharma and information technology.
  • The question is whether it is sufficient reason to experiment with the value of the currency in a way that makes it expensive for Indians to import goods.

Suggestion:

  • Exporters should be pushed to adapt to the uncertainties of doing business across borders.
  • And the rupee’s improving external value should be seen, at least in part, as a reflection of the improving quality of the currency.
  • At the same time, going forward, tighter monetary policy in the West will invariably exert more pressure on the rupee.
  • The RBI would then have to muster greater will to let the rupee find its natural value.

Number of income tax returns filed goes up 24.7%: (The Hindu)

  • As per Centre reports, the number of income tax returns filed this financial year up to August 5 increased by almost 25% and the advance tax collections during that period has risen 41.8% over the year-earlier period.

The Figures

  • The substantial increase in the number of Income Tax Returns (ITRs) filed was a result of demonetization and Operation Clean Money.
  • The number of returns filed as on August 5 stands at 2,82,92,955 as against 2,26,97,843 filed during the corresponding period of ficsal year 2016-2017, registered an increase of 24.7% compared to growth rate of 9.9% in the previous year.
  • Advance tax collections of personal income tax (i.e. other than corporate tax) as on August 5, 2017 showed a growth of about 41.79% over the corresponding period in FY 2016-2017.
  • Personal income tax under self-assessment tax (SAT) grew at 34.25% over the corresponding period in FY 2016-2017.

Profit petroleum may be exempt from levy of GST: (The Hindu)

Context:

The oil and gas exploration and production business is likely to get a boost following a proposal to exempt the profit petroleum paid to the Centre from the Goods and Services Tax (GST).

Introduction:

  • The production sharing contracts (PSCs) signed for exploration and development of oil fields require operators to pay a pre-determined share of the surplus petroleum output to the Centre as a form of royalty.
  • Presently, such profit petroleum is subject to GST as it has been construed as a payment made by firms for a service.
  •  The levy of GST doesn’t appear to be sync with the PSCs signed under the New Exploration Licensing Policy
  • The proposal to rectify this policy is likely to be taken up by the GST Council at its next meeting in September.

Key points:

  • The PSC allows contractors to recover all expense incurred in exploration, development, production, and this includes costs of all inputs and indirect taxes paid thereon.
  •   Operators are not allowed to recover the profit petroleum paid to the government as a cost under the PSC.
  • Industry bodies like CII had made several representations on the issue to the Centre, contending that paying a share in profit petroleum to the government is a profit-sharing arrangement rather than a payment for service.
  •  Profit petroleum is a bidding parameter for player under the NELP regime and they are required to share varying amounts of the surplus oil drilled beyond a particular threshold with the government.
  • The government is also likely to clarify that ‘cost petroleum’ which is the value of petroleum that a contractor can take in order to recover all contracts costs for exploration and royalty incurred during a year could be taxable.

New policy:

  •  The government recently has approved HELP (Hydrocarbon Exploration and Licensing) Policy which will replace the existing NELP.
  • Under the new regime revenue-sharing arrangement is proposed.
  •  The new policy HELP replaces the previous policy regime for exploration and production of oil and natural gas, known as New Exploration Licensing Policy (NELP).
  • Under the new regime will be a uniform licensing system which will cover all hydrocarbons, under a single license and policy framework.

GST impact on the logistics sector: (Live Mint, Editorial)

Context:

Goods and services tax (GST), could affect profitability of the logistics sector in the short run, but operational efficiency is bound to improve in the long run

Introduction:

  •  The logistics sector attracts GST rate of 18%, up from 15% in the previous tax regime.

Logistic sector components:

  •  The logistics sector comprises the road transport sector (consisting of unorganized small businesses, trucking, fleets and large transport companies), the storage and warehousing sector and third-party logistics (3PL).
  •  These can be further classified into big and small players and asset heavy/light companies.

Key performance measures:

  •  Profit after tax (PAT) as percentage of income and profit before interest, taxes, depreciation and amortization (PBITDA) as percentage of income.
  •   Between 2010 and 2015, PAT has declined for all sub sectors and shows volatility for the logistics and the storage sector.
  •     PBITDA is an important measure that reflects operating efficiency and ranges between a low of 7% for the road transport sector to a high of approximately 20% for the storage sector.

What ails logistics?

  •  Operational efficiency could have been falling for a variety of reasons, heavily affecting overall transportation costs as the logistics sector has been traditionally beset with several problems.
  • This includes complicated networks, increasing coordination costs across the supply chain coupled with deficient infrastructure, entry taxes and poor vehicle-load-carrying capacities, resulting in delays and damages.
  • The myriad number of taxes had made logistics a cumbersome and costly process.

Way ahead:

  • For manufacturers, the goods and services tax (GST) has now replaced the multiple state VATs and the need to have a hub across all states will cease to exist.
  • This will allow firms to redesign supply chains and centralize hub operations to take advantage of scale economies.
  • It will also allow firms to employ efficient practices such as bulk-breaking and cross-docking from a central location.
  •  Already, Nagpur, India’s “zero mile city”, is looking to become the “nation’s warehouse” and is witnessing increased investment from retailers and warehouse companies betting on GST transforming the nation’s logistics space.

GST and its impacts:

  •  Under GST, the tax on warehouse, storage and other labour services has increased from 15% to 18%.
  •    So a third-party logistics provider will now have more incentive to move towards the provision of services that have a high degree of value addition and where input tax credit can be claimed.
  •  This can result in consolidation in the storage and warehouse sector.
  •   GST will bring a lot of alignment of value-added services in the logistics sector .
  • This will make way for cutting-edge investments and mergers and one will see a phenomenal increase in asset utilization and increase in operational efficiency
  •   There will be new investment opportunities for technology-enabled mini warehouses along the highways and the sector will witness a fresh wave of technology enabled start-ups.
  • While GST won’t solve many intrinsic problems of India’s transport network, it could reduce the logistics costs of companies producing non-bulk goods by as much as 20%, according to an estimate by Crisil Ltd
  • The impact and overall cost benefits of GST will additionally vary widely across industries.

Food security: SC raps Centre, States: (The Hindu)

 Context:

The food security law should quell the hunger of those below the poverty line the Supreme Court says

Introduction:

  •  According to the Supreme Court judgment, State Food Commission set up under the National Food Security Act in Haryana, has been sitting “jobless” and “without proper infrastructure”.
  •  The judgment by a Bench of Justices Madan B. Lokur and N.V. Ramana listed nine other States- Madhya Pradesh, Karnataka, Andhra Pradesh, Telangana, Maharashtra, Gujarat, Jharkhand, Bihar and Chhattisgarh.
  •   These states came under its scanner for their damp response to the food security law meant to quell the hunger pangs of millions of poor families, women and children living below the poverty line.

Judicial remarks:

  • Referring to Article 256 of the Constitution, the judgment said that “Government of India cannot plead helplessness in requiring State Governments to implement parliamentary laws.
  •  Justice Ramana focused on the spirit of co-operative federalism unique to the Indian democracy. Justice Ramana exhorted the executive powers to bridge the growing gap between the Centre and State governments.

Directions from SC:

  •  The SC directed the government to frame rules and designate independent officials from a grievance redressal mechanism under the Act within a year.
  • It directed the states to set up State Food Commissions and vigilance committees in every state by the end of the year and set up social audit machinery.

Background:

In a series of direction, the court ordered the Secretary in the Union Ministry of Consumer Affairs, Food and Public Distribution to meet with State Chief Secretaries by August 31 and brainstorm ways and means to implement the food security law.

Rules framework:

  • The court directed the government to frame rules and designate independent officials for a grievance redressal mechanism under the Act within a year.
  •   It directed the states to set up State Food Commissions and vigilance committees in every state by the end of the year and set up social audit machinery.

National Food Security Bill:

The National Food Security Bill was passed by both Houses of Parliament and received the assent of the President on September 10, 2013.


Privacy in the digital age: (The Hindu, Editorial)

Context:

  • The current focus on the right to privacy is based on some new realities of the digital age.

Explanation:

  •         The digital network enters the most proximate spaces and challenges the normally accepted notions of the private.
  • It brings into focus new means of exercising social, economic, and political power, and reducing of autonomies.
  • It seems that for many, the right is basically against the state, and not so much the digital corporations.
  • But a right is a substantive right only if it works in all situations, and for everyone. For example;
  • A right to free expression for an individual about her exploitation is meaningless without actual availability of security that guarantees that private force cannot be used to thwart this right.
  • The role of the state therefore is not just to abstain from preventing rightful free expression but also to actively ensure that private parties are not able to block it.

Suggestions:

  • Like in the physical space, the private and the public must be separated in the digital realm as well.
  • We need a constitutional definition and guarantee of the right to individuality, personal autonomy and privacy in the digital age.
  • While establishing a right to privacy, the Supreme Court must also direct the state to develop appropriate institutions for shaping the state’s role in a digital society/economy.
  • This may require, at some stage, an independent branch of the state exclusively dealing with data issues and management.
  • Framing of a right to privacy must not curtail the state’s due role in our collective digital futures.
  • This will only ensure that global digital corporations become all-powerful economic, social and political actors.
  • They already provide most of the digital services that appear to be of a public good nature, and in turn control and shape entire sectors.
  • A citizen must have options to undertake basic digital functions like emailing, information search, social networking, etc. without sacrificing her privacy rights.

New mobile data plan for Naxal areas: (The Hindu))

Context

  • The Union Home Ministry is scrutinizing the proposed specifications for providing data connectivity services through mobile towers installed in the Left Wing Extremism-affected areas across 10 States.

Mobile connectivity scheme

  • This is done in view of the possible security implications.
  • Performed in coordination with the Ministry of Home Affairs (MHA), the Department of Telecommunications has already got towers installed in over 2,000 sites during Phase-I of the mobile connectivity scheme in Naxal-affected districts.
  • Concerns related to installation of towers and improved road and air connectivity were taken up during a review meeting chaired by Home Minister Rajnath Singh on May 8.
  • It was attended by the Chief Ministers of six States, apart from Intelligence and security officials.
  • The Phase-II of installation of mobile towers would soon be initiated.
  • Jharkhand and Chhattisgarh will also have sought an upgrade of the mobile communications.

 

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