9 PM Daily Brief – July 16th,2020

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9 PM for Main examination

GS-2

  1. China reshaping Asia and Indo-pacific
  2. India should believe in the EU
  3. Equalization levy – Taxing the digital space
  4. Need of National Curriculum Framework for police education and training.

GS-3

  1. Carbon financing can boost rural infrastructure development in India

9 PM for Preliminary examination

FACTLy


1.China reshaping Asia and Indo-pacific

Source The Hindu

Syllabus – GS 2 – Effect of policies and politics of developed and developing countries on India’s interests

Context – China’s coronavirus “mask diplomacy” has given way to tense geopolitical confrontations with a growing array of its neighbours, from stand-offs with Vietnam and Malaysia in the South China Sea to threatening Australia.

Steps taken to stop Chinese aggression

Top-Down solutions

  1. Limiting economic exposure– The Indian, Japanese, Malaysian, and Australian governments have all taken concrete steps to reduce their economic exposure to Beijing, spanning investment, manufacturing, and technology.
  • For example – India’s Atmanirbhar bharat is aimed at promoting domestic capabilities in India and reducing dependence on China.
  1. Recognizing Chinese aggression in South China Sea– The Association of Southeast Asian Nations (ASEAN) Foreign Ministers issued one of their strongest statements to date on the South China Sea, insisting that maritime disputes must be resolved in accordance with the UN Law of the Sea treaty.
  2. Strengthening strategic relations – India and Australia recently inked a new military logistics agreement in the “virtual summit” between Prime Ministers Narendra Modi and Scott Morrison. The Quadrilateral Dialogue between Australia, India, Japan, and the United States is growing stronger and even expanding.

Bottom-up solutions

  1. Mobilising people in digital space -A new “Milk Tea Alliance”, named after the popular beverage, is aimed at forging solidarity between Taiwanese, Hong Kongers, and Southeast Asians on online platforms against China’s – ‘One China’ principle.

Steps that can be taken by USA

  1. Supporting regional institutions –S. policy needs to start supporting, rather than attempting to commandeer, regional efforts to build a less China-centric future for the Indo-Pacific. U.S. leadership would be far more effective if it worked with Indo-Pacific partners on the issues that they prioritise and provided them significant space for independent action.
  2. Coercion vs cooperation – China certainly has the power to coerce, it also has a tremendous ability to be its own worst enemy by pushing too hard on its neighbours. Washington should avoid repeating Beijing’s mistakes and offer a clear alternative in word and deed to China’s “Wolf Warrior” diplomacy.
  • For instance –Moves such as demanding that a G-7 communiqué refer to COVID-19 as the “Wuhan virus” and blocking mask shipments to close allies are the kind of coercive actions that the U.S. should leave to China.

Way Forward – As Beijing’s confidence in its growing material and military power solidifies, its neighbours as well as USA will need to think carefully about the long-term decisions necessary to preserve an open regional order.

2.India should believe in the EU

Source: The Hindu

Syllabus: GS 2-Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Context: Analyzing the partnership between India and EU in the backdrop of the current fragmented world.

Relationship between India and EU:

  • Common between them:
    • Both aim to enhance strategic autonomy and their global standing.
    • Urgent need to address climate change: Diversifying strategic value chains is also a common interest.
  • On Economic terms:
    • Investments in India: The EU is India’s first trading partner and the biggest foreign investor with €67.7 billion worth of investments made in 2018 which is equal to 22% of total FDI inflows.
    • Room for improvement: EU investments amounted to €175.3 billion in China in the same year.
    • Enhanced business cooperation can help both diversify their strategic value chains and reduce economic dependency especially on China.
    • India could succeed in attracting EU investment that might be moving out of China but to do it must address the mutual trust deficit.
    • Facilitating people’s mobility and connectivity is a good way to improve mutual understanding and create opportunities for innovation and growth.

The EU and India must tackle the issue of Free Trade Agreement (FTA) negotiations.

Talks on FTA:

  • Impact:
    • Significant gain for India: A new study from the European Parliament assesses the potential impact of an EU-India trade agreement at between €8 billion and €8.5 billion gains from increased trade for both sides.
    • Additional potential gains:From enhanced coordination on the provision of global public goods such as environmental standards.
  • On climate change:
    • The EU is building on its ambitious target to render the continent carbon-emission neutral by 2050 through its new industrial strategy, the Green Deal.
  • In geopolitical terms:
    • Increasing rivals for India: The Indo-Pacific region is increasingly the focus of attention and hence India should capitalize on its geopolitical leverage there.
    • Stronger cooperation with like-minded and democratic powers can support this effort especially towards assertive competitors like China.
    • Even India’s strongest bilateral relations with individual EU member states do not come close to the potential of dealing effectively with the EU as a whole. New Delhi must learn how to maximize benefit from this strategic partnership.

Ruptures caused by COVID-19 and Way Forward:

  • Occasion for the EU to prove its worth:The measures put in place at supranational level show a strong willingness to buttress the fundamental pillars on which the EU is built.
  • Next generation EU proposal: It was submitted by the European Commission and has surprised many by its bold approach.
  • Game changer: It allows the EU to take on debt in its financial implications. It shows that the ties that bind the EU extend well beyond treaties and individual members’ self-interest.
  • The EU champions the rules-based international order which is being increasingly challenged by the proliferation of exceptionalism.
  • The EU and India must join forces to promote sustainable reform of multilateral institutions, with the World Trade Organization (WTO) first in line.
  • A strong partnership would help both the EU and India become global decision-makers.

3.Equalization levy – Taxing the digital space

Source – Live mint

Syllabus – GS 2 – Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Context – The USTR is initiating a probe into the imposition of digital taxes on firms like Facebook, Netflix and Google in the EU and nine countries, including India.

Equalization levy

1.Equalization Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalization levy:

    • The payment should be made to a non-resident service provider;
    • The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

2.Currently the applicable rate of tax is 6% of the gross consideration to be paid.

3.Collection of tax – The burden of paying the equalization levy, which is often called the ‘Google tax’, to the central government, falls upon the Indian company or a non-resident company with a physical establishment in India.

Rationale for introducing equalization levy

  1. Foreign firms with permanent establishments vs. digital companies– Foreign firms with permanent establishments are taxed at the rate of 40%. But the digital companies did not have any permanent establishment in India, so their income could not be taxed.
  2. Digital growth in India– Tech giants or e-commerce companies such as Google and Facebook benefit from growth of digital sector in India by generating revenue from outside the country of residence.
  3. Level playing field for domestic companies –It aims to equalize tax component between the domestic e-commerce company which is taxed under corporate tax and foreign non-resident e-commerce company which was not under Indian tax jurisdiction.

Issues associated with equalization levy

  1. Discourage startups– Since the burden is shouldered by local start-up’s and SMEs who advertise on these platforms, Indian start-ups, other stakeholders are requesting cancellation or reduction in the equalization levy on the advertising revenue that overseas firms generate from India.
  2. Double taxation– It also discourage foreign firms from indulging in activities in India as they might not be liable for a tax deduction in their home country and can face double taxation.
  3. Additional 2% levy– 2% equalization levy imposed this fiscal year on any purchase by an Indian or India-based entity through an overseas ecommerce platform is not clearly worded. Companies fear that all kinds of online transactions including hotel bookings, software purchase and even buying certain components from overseas could come under the gamut of the 2% levy introduced this year due to the way the law has been worded.

Way Forward – The 2% equalization levy in its current form is too widely worded, needs clarity and could be challenged as lacking constitutional validity as it brings thousands of transactions made online under its scope. The government needs to clearly decide what transactions it wants to tax or whether there is a need for this levy when India is becoming investment hub of digital companies.

4.Need of National Curriculum Framework for police education and training.

Source: The Indian Express

Syllabus: GS 2-Important aspects of governance, transparency and accountability, e-governance applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.

Context: The custodial deaths in Thoothukudi and the killing of eight policemen in an ambush in Uttar Pradesh has brought the country’s police force under scrutiny.

Background:

  • There are question marks on Vikas Dubey’s encounter.
  • Killing of George Flyod in USA:
    • It led to a series of protests against police atrocities in the US culminating into the Black Lives Matter campaign.
    • The Minneapolis council has drafted a plan to abolish the police and replace it with a department of community safety and violence prevention.
  • No such outrage in India:Some people justify police violence in Kashmir and the Northeast as the only solution to the insurgency.

Maintenance of law and order: It is primarily the responsibility of the states.

  • Training:
    • Place of training:
      • IPS: They head the Police departments providing the system an anchor at the Central level. These officers are trained at the Lal Bahadur Shastri National Academy for Administration, Mussoorie and Sardar Vallabhbhai Patel National Police Academy (NPA) at Hyderabad.
      • Lower-level officials and constables: Theyare trained at different state police academies. Most of the force uses strong arm tactics that date back to the colonial era at the lower level.
    • Training time:
      • An IPS officer is trained for about two years, an inspector-level officer receives a year’s training and a constable is trained for nine months.
    • Quality of training:
      • It varies according to state. Generally, the officials at the lower rungs only receive basic training for field challenges and human rights issues are not an essential part of their training.

Fact: There are also two police universities in the country and the home ministry has recently approved the creation of a national police university.

  • Qualification:
    • One needs to be a graduate to become an IPS officer.
    • For recruitment at the lower levels of the force: Only the physical agility of the candidate is tested.

Issues of police:

  • Police officials work 10 to 16 hours and seven days a week which takes a toll on the health of several officers.
  • The “Status of Policing in India Report 2019”:
    • Itpoints out that 70 police stations across 20 states do not have wireless facilities and 214 police stations do not have a telephone.
    • More than 40 per cent of police stations in the country cannot avail the help of forensic technology.
  • Politicizing issue: The “depolicing society” needs to be discussed on its nature and scope.
  • Need of modernization: The Bureau for Police Research and Development was established in 1970 for the “modernization” of police. The institution has rarely engaged with human rights issues.
  • Only a few states have in-service training for lower level officers and the constabulary.

All this is bound to affect the functioning of the police and reflect in the ways they engage with the public.

Need of NCF and Way Forward

  • It is high time that we address the infrastructural and organizational issues and concerns related to the police.
  • There is a need to evolve a National Curriculum Framework (NCF) for police education and training like that for teachers and medical and engineering services.
  • The curriculum must be informed by discussions at different levels — universities, NPA and the society itself.
  • A progressive and democratic society and an aspiring economic superpower cannot be policed by a regressive system.
  • An NCF can help the police act according to its motto-“With you, For you, Always”.

5.Carbon financing can boost rural infrastructure development in India

Source: Financial Express

Syllabus: GS-3 Environment

Context: Climate financing has been one of the most effective tools in incentivising and scaling clean energy projects.

What is climate finance?

Climate finance refers to local, national or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions to address climate change.

Clean Development Mechanism (CDM):

  • It comes under the Article 12 of the Kyoto Protocol and seeks to reduce the concentration of GHG emissions in the atmosphere in a cost-effective way.
  • It allows developed countries to use carbon credits generated from clean energy projects in developing countries to meet a part of their emission reduction targets under the Kyoto Protocol.
  • The Adaptation Fund is financed by a 2% levy on certified emission reduction (CERs) issued by the Clean Development Mechanism (CDM).

Ongoing and upcoming interventions that have the most potential in enabling low carbon development in India’s rural areas:

UJALA 2.0:

  • Launched in 2015, the Unnat Jyoti by Affordable LEDs for All (UJALA) aims at promoting efficient usage of energy consumption, energy savings and efficient lighting for all. Under the scheme, Electricity Distribution Company distributes LED bulbs at subsidized rates to every grid-connected customer with a metered connection.
  • 36 crore LEDs have been distributed till date; the rural household penetration has been about 20%. The learnings from the scheme could be used to further spur adoption of LEDs in the rural areas, thus creating a thriving market.

Decentralised solar plants: The government is in the process of establishing decentralised solar plants of 0.5 to 10 MW in Maharashtra on unused government land near rural substations.

  • Using carbon finance, additional solar capacity can be added to provide public lighting in rural areas, and batteries can be installed to provide clean peak power in the evening.
  • This would enable the proliferation of clean energy and increase power access.

Gram Panchayat street lights: Using carbon financing and innovative business models, almost 3.5 crore streetlights can be installed in rural areas. This would lead to a significant infrastructure upgrade for the villages.

Conclusion: Carbon financing can be used to strengthen rural infrastructure cleanly and sustainably, and create a resilient and sustainable rural community.


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