GS 2 India and neighbors
Don’t harbour unrealistic illusions, China tells India: (The Hindu) Beijing to safeguard its interest at any cost Context
- China to safeguard its security interests at “any cost” as its sovereignty was indomitable for them. The assertion was made ahead of this week’s National Security Advisers’ (NSA) talks to resolve the standoff.
- China is urging India to correct its mistake, cease provocations, meet China halfway in jointly safeguarding the border region’s peace and tranquility.
- National Security Adviser Ajit Doval is set to travel to Beijing this week to attend the BRICS NSAs’ meeting scheduled to be held from July 27-28 during which he is expected to hold talks with his Chinese counterpart Yang Jiechi.
What’s brewing in Darjeeling: (The Hindu, Editorial) The Darjeeling hills crisis Context
- A resurgent Gorkhaland movement and subsequent state crackdown have infused life with violent uncertainty.
- In May, the West Bengal government announced Bengali as a compulsory language in schools across the state.
- By June, this triggered protests and claims of ‘linguistic imperialism’ in the Darjeeling and Kalimpong districts (where the lingua franca is Nepali).
- The ensuing clash with police left government property destroyed and many protesters injured.
- The Army was brought in to staunch unrest, but it escalated instead. Subsequent protests and crackdowns have led to further destruction and deaths.
- Slogans like ‘Jai Gorkha, Jai Gorkhaland’ reverberating through the hills, Darjeeling has plunged again into the throes of agitation.
- Internet and cable television have remained suspended since June 18.
- Strikes and security threats have devastated the local economy at the peak of tourist season.
Crux of the movement
- The Gorkhaland movement is a long standing quest for a separate State of Gorkhaland within India for Nepali-speaking Indian citizens.
- With roots dating back over a century, Gorkhaland is a classic subnationalist movement, not unlike those that have produced other States, most recently Telangana, Uttarakhand, Jharkhand, and Chhattisgarh.
- Beyond all else, Gorkhaland is a desire for the recognition, respect, and integration of Gorkha peoples in the Indian nation-state.
- Recent turmoil mustn’t obscure deeper histories.
- For Gorkhas, the troubling realities of colonial and present-day Darjeeling are eerily similar: linguistic chauvinism, ethnic and racial discrimination, resource extraction, unilateral territorial claims, the denial of self-governance, political suppression; and ultimately, an unwillingness to respect the ‘native point of view’.
- This double bind of colonial nostalgia and neocolonial regional domination produces a sense of constant déjà vu, leading to the desperate feeling that genuine progress is out of reach. These unsettling truths demand some soul-searching.
Opposition seeks scrutiny of Banking Regulation Bill: (The Hindu) The Banking Regulation (Amendment) Bill introduced Context The Banking Regulation (Amendment) Bill, 2017 was introduced in the Lok Sabha by Union Finance Minister Arun Jaitely. The gist of the Bill
- The Bill seeks to empower the RBI to resolve the problem of stressed assets, even as the Opposition demanded that it be sent to a standing committee for scrutiny.
- The Bill seeks to amend the Banking Regulation Act, 1949, and replace the Banking Regulation (Amendment) Ordinance promulgated in May.
- The Bill allows the RBI to open an insolvency resolution process in respect of specific stressed assets.
- The RBI will also be authorized to issue directives for resolution and appoint authorities or committees to advise the banking companies on stressed asset resolution.
Bilateral catalyst: (The Hindu, Editorial) Modi’s recent visit promises Science & Technology development Context
- Science and technology, a key driver for innovation and job creation in both countries, is taking Centre stage in U.S – India strategic relations.
Focus on Science and Technology
- Knowledge and technology have recently become vital to most of the bilateral agreements and strategic dialogues between India and U.S.
- Bilateral agreements such as the Partnership to Advance Clean Energy and joint participation in mega projects in the areas of fundamental science such as the High Intensity Superconducting Proton Accelerator, the Thirty Meter Telescope, the Laser Interferometer Gravitational Observatory and the NASA-ISRO Synthetic Aperture Radar Mission creates huge impact.
- Such focus has a positive impact on all spheres of collaboration such as education, economy and trade, defense and homeland security, energy and climate, health, agriculture and space.
- Knowledge generated through science and technology needs to be capitalized in order to fuel the process of innovation and the creation of an entrepreneurial class which can help find solutions for the society at multiple levels.
Why do we need it?
- The core gears of India’s innovation ecosystem need to be supported by enabling systems and practices to transform technologies and inventions into products.
- Learning from U.S. institutions the practices of the innovation value chain ranging from ideation to prototyping and business-friendly incubation of the prototypes and the fostering of a proper legal and investor-friendly milieu will make a visible difference on the ground.
- To further strengthen the existing system of collaboration and help initiate new ones, India needs to understand the science, technology and innovation (STI) landscape in the U.S.
What India needs to do?
- India’s institutional system needs to enable the scientists and engineers to pair up with business mentors to make the successful journey from the laboratory to the marketplace.
- Initiatives like the U.S.-India Science and Technology Endowment Fund, the Stanford-India Biodesign Programme and the Khorana Technology Transfer programme should be strengthened to enhance the efficiency and productivity of our emerging innovation system.
- Integrating American technologies with products of Indian grassroots innovations will enhance the value of the latter and make them scalable, affordable and marketable.
- A database of U.S.-based inventors, their inventions and technologies relevant to India needs to be created.
- The existing collaborative partnerships and student exchange programmes between research institutions and universities in both the countries need to be strengthened at various levels including university-to-university, university-to-industry, industry-to-industry, and consortia-to-consortia levels.
- Joint incubators, to enable Indian start-ups to introduce products in the U.S. market and to facilitate U.S.-based start-ups to enter India with inflow of technologies, mentors and best business practices, should be set up.
- The knowledge and skills of the successful Indian diaspora and Indophiles in the American administration should be leveraged to not only support the Indian start-up ecosystem but also to raise funds for programmes that will help India achieve inclusive development.
- India’s pledge to manufacture locally, create more jobs and stay ahead of the competition can be redeemed to a great extent by marrying the Indian skills of low-cost innovation.
GS 3 Indian Economy. Planning, Growth and Employment
Taxing times for the States: (The Hindu, Editorial) GST to herald new era in federalism Context: The withering of the state’s fiscal independence under GST strikes at the core of federalism Introduction:
- The new Goods and Service Tax (GST) regime, introduced by the way of the 101st Constitutional Amendment, is based on a fundamental notion that uniformity in tax administration across the nation is an idea worth cherishing.
- GST will integrate India into a single market with a standard rate of taxation.
- The Constitution of India establishes a clear, federal setup.
- It prescribes two levels of government, one at the Centre and the other at each of the States.
- The matters of national importance like foreign affairs and defence of India, are assigned to the Union, the responsibilities placed on the States are also particularly salient. For example, the power to legislate on public order, public health and sanitation, agriculture, water and land are all exclusively vested in the State governments.
- This authority, as Chief Justice Maurice Gwyer observed in the context of the division made under the Government of India Act, 1935, which the constitution largely assumed, is no slight matter.
Partners in taxation:
- In this constitutional setup, where the State governments are seen as equal partners, the founders thought it necessary to be very careful in allocating the power of taxation.
- The central government was given the power to tax income other than agriculture income, and levy indirect tax in the form of customs and excise duties, state governments were given the sole power to tax the sale of goods and the entry of goods into a State.
- This division of fiscal responsibility was made with a view to making States self-sufficient, and with a view to supplying to regional powers the flexibility needed to govern according to the respective needs of the people.
- When resisting changes suggested to the draft Constitution in the Constituent Assembly, which demanded that the rates of sales tax be shifted to parliamentary law.
- B.R.Ambedkar put it this way: “It seems to me that if we permits the sales tax to be levied by the provinces, then the provinces must be free to adjust the rate of the sales tax to the changing situation of the province, and, therefore, a ceiling from the Centre would be great handicap in the working of the sales tax”.
Confusion over GST Council:
- The introduction of the GST, however, militates against this grand constitutional objective, against the aspirations set out in Article 1 of the Constitution, which declares India as a “Union of States”.
- In endeavouring to pursue the goal of creating a single market through a homogenization of the tax regime, the amendment grants to both the Union and State governments concomitant powers over nearly all indirect taxes
- The GST council comprises the Union Finance Minister, the Union Minister of State in charge of revenue or finance, and the minister in charge of finance from each State government.
- The council’s decision will require a three-fourths majority, but the Central government’s votes will have a weightage of one-third of the total votes cast, according, thereby, to the Union a virtual veto.
- Now, there’s some confusion over whether the GST Council’s decision are actually binding on the various State governments.
- The newly introduced Article 279A, which creates the council, describes its decision as “recommendations”, but it also grants the council the power to establish a mechanism to adjudicate any dispute that might arise between any of its members in implementing the recommendations.
- If the council’s recommendations are to be treated as purely advisory, it leaves us wondering why we need a dispute resolution mechanism at all.
Conclusion: India’s federal architecture is premised on a principle that promises the maintenance of an internal sovereignty, where State functions as separate political entities within the domain allocated to them. But often the drive to maintain federalism, where the Constitution demands it, goes beyond any obligation to preserve the rights of the States. It goes to the root of the constraints against all arbitrary power, and, to that extent, this amendment is a grave onslaught on the Constitution’s basic structure. Ambiguity on GST irks solar players: (The Hindu) Impact of GST on the Indian solar industry Context: The government’s decision to levy 5 per cent GST on solar panels as against the earlier classification of 18 per cent comes as a major reprieve to the industry Introduction:
- Ambiguity surrounding the Goods and Services Tax rate on various inputs is troubling the solar sector, with industry players also saying that their suppliers are not passing on the benefits arising out of input tax credits, leading to higher prices and higher tariffs for customers.
- GST has multiple ramifications not only for the Indian solar sector, but for the economy as a whole.
India’s solar sector:
- To talk about the Indian solar sector, it can be regarded as the future of India’s energy roadmap.
- India faces the crucial energy dilemma considering that approximately 18,000 villages do not have access to energy, but, at the same time, the country has a strong commitment to reduce its carbon footprint.
- It is here that solar energy comes to the rescue.
- It is eco-friendly and hence can play an instrumental role in reducing country’s carbon footprint.
- The solar energy has the potential to bridge the crucial energy gap especially in remote areas where access to conventional energy is difficult. From the consumer’s viewpoint, switching to solar energy will lead to reduction in burgeoning power bills.
- Taking into account the benefits of solar energy the government has always accorded a slow of incentives to this sector.
- The Government’s decision to levy 5 per cent GST on solar panels and solar PV cells as against the effective rate of taxation at 0% in the previous regime will, no doubt, lead to marginal increase in project costs.
- The 5% tax rate specified by the GST Council for solar components has increased the cost of the projects, the ambiguity over the other inputs-which are used of projects other than in the solar sector- in creating confusion among solar developers.
- There is also a little confusion on solar right now because the detailed gazette talks about structures, invertors, wires, and other components without specifying whether they are for solar or not.
- There is confusion about whether an inverter, if it is being used for solar, comes under 5% or the normal rate of 28%.
Impact of GST on Indian solar industry:
- The decision is expected to boost inter-state trade directly with customers.
- Besides removing the cascading effect of taxes, GST will improve cash flows due to change in rates of taxation.
- Another positive impact of GST is availability of input credit against supply of solar goods which will improve cash flow and EBITDA.
- Reduction in multiple tax compliances – state as well as central — can be co-related with corresponding reduction in administrative costs.
- It will also lead to reduction in warehouse costs. For the economy as a whole, GST will lead to abolition of trade barriers across state and which would enable the growth of common market.
- On July 1, 2017, India embraced the Goods and Services Tax(GST) legislation. Touted as one of the major financial reform since Independence, the legislation had initially created apprehension in minds of taxpayers and entrepreneurs alike.
- GST will subsume the whole gamut of indirect taxes such as VAT, Service Tax, central excise tax, octroi into one unified tax.
Conclusion: So, it would be prudent to state that implementation of GST will not dampen the solar sector if one were to take into account the broader picture. A lower GST rate would have surely been a boon but it would not make a significant dent on the solar sector in the long run. Irrespective of new legislations coming into picture, solar energy will continue to be among the crucial mix of India’s energy roadmap taking into account the country’s ambitious target of solar power of 100 GW by 2022 Getting it wrong on GST: (Indian Express, Editorial) The GST on aids and appliances for persons with disabilities Context: GST on aids, appliances for disabled points to government’s misplaced priorities Introduction: ·The government imposed GST on aids and appliances for persons with disabilities. ·Crutches, calipers, hearing aids, walking frames-all replacements, albeit artificial, for body parts along with a host of other aids and appliances which the disabled persons use would attract a GST of 5 per cent. · In comparison, items used to embellish your body, will attract less and in some cases, no GST. So, while kajal, kumkum, bindi, bangles and even human hair are not taxed at all, gold and diamonds will attract a GST of just 3 per cent Impact of Law:
- Such a taxation law could harm to the interests of disabled persons.
- The fact that without aids and appliances the disabled are deprived of all these appliances and forced into a disempowered state of seclusion has been ignored.
There are two reasons why aids and appliances for disable people have not been exempted from the GST:
- GST rate at 5%:
- It needs to be clarified that under the GST, the most beneficial rate of tax on any item is 5 per cent. Aids and appliances for disabled people are taxed at this rate.
This allows the suppliers of these items to claim an input tax credit for the GST paid on the inputs and input services used for supplying these items.
- Most of the inputs and input services are in the 18 per cent GST rate category.
- Some of the sophisticated electronic inputs are under the 28 per cent rate.
- No supplier of these items will pay GST from his pocket and the input tax credit will always be more than sufficient for discharging the GST liability.
- Under the GST, input tax credit or refund is not available for those goods on which the GST rate is zero percent.
- If the GST rate had been kept at zero per cent for these items, the suppliers would not have been able to avail of the input tax credit. This would have made these items expensive.
- Exemption from GST:
- Is such goods were exempt from GST, and then on imports of similar items too, the corresponding integrated GST would have to be kept at zero per cent.
- This will increase the competition for domestic manufacturers of these items, as they will not be able to avail the input tax credit on the inputs and inputs services used for the manufacture of items for the disabled, which in turn will increase their cost and make them non-competitive with respect to imported aids and appliances.
- This is against the national interest and would result in a loss of jobs in the units of the Indian manufacturers.
Science and Tech
SC for more data on GM mustard: (The Hindu) (SC for more scientific information on GM mustard) Context:
- The Supreme Court told the Centre on Monday that if Genetically Modified (GM) mustard crop has an adverse impact on the other crops, it would injunct its commercial release till it decides the petition seeking a moratorium on growing the crop
- A Bench of Chief Justice of India J.S.Khehar and Justice D.Y. Chandrachud said an injunction order would be passed if it was found that GM mustard affected health and lives for generations.
- The court scheduled the case for hearing on July 31.
- The court asked additional solicitor general Tushar Mehta to supply scientific data to support the regulator’s approval.
Controversy about GM Mustard:
- GM mustard will require almost double the quantity of fertilser and water.
- GM mustard can affect honeybees directly and indirectly through effecting flowering and pollen production.
- The Genetic Engineering Approval Committee, which is responsible for approving large-scale releases and commercialization of GMOs, functions under the Ministry of Environment and Forest and is not entirely independent.
Conclusion: In a current environment where climatic change would have negative effects on yield of many major crops which could seriously undermine food security, GM crops are the way forward.