9 PM Daily Current Affairs Brief – May 24, 2021

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Here is our 9pm current affairs brief for you today

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Significance of SC Ruling on Personal Guarantors for Corporate Loans

Source-The Hindu

Syllabus- GS 3 – Indian Economy

Synopsis – The Apex Court has dismissed all challenges to the liability of personal guarantors for corporate loans under the insolvency code.


The Supreme Court upheld a government notification of 2019 issued under the Indian Insolvency and Bankruptcy Code (IBC).

  • This allows banks to initiate insolvency proceedings against personal guarantors who are usually promoters and top officials of debt-laden companies.
  • Also, approval of a resolution plan for the corporate debtor does not end the personal guarantor’s liability.

Central Government’s 2019 notification – It made personal guarantors a separate category of individuals. They can be approached for recovery for defaults under the IBC as part of the insolvency proceedings against defaulting corporate entities.

This gives additional powers to lenders [financial institutions or banks] under IBC, to recover their money.

  • In response to the 2019 notification– There were more than 40 petitions filled, where petitioners had challenged the validity and operationalization of the central notification.
  • However, the SC dismissed all the petitions stating that the government right.

Significance of Ruling

  • The SC judgment will boost recovery efforts of banks involving piles of bad loans.
    • This will enable banks to take simultaneous action against corporate debtors and personal guarantors.
    • As a result, the promoters [as the provider of personal guarantees] have to deal with their own insolvencies and not become an impediment/roadblock to the insolvency proceedings of the corporate debtor.
  • By roping in guarantors, there is a greater chance that they would “arrange” for the payment of the debt to the creditor bank to save themselves.
  • As guarantors can be approached even if an insolvency proceeding is ongoing, Banks can enhance recovery. Because most banks agree to ‘haircuts’ when negotiating a resolution plan with a new promoter for the defaulting company.

Way forward-

The judgment provided the much-needed teeth to banks and financial institution far as recovery action with respect to personal guarantees was concerned.

Need for Eco Tax in India

Source: The Hindu

Gs3: Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment

Synopsis: Eco Tax in India can be useful for sustaining public  Health financing as well as in mitigating effects of climate change.


  • India’s tax revenue decreased significantly during the Pandemic. It has resulted in widening the Fiscal deficit. For instance, the fiscal deficit for FY 2020-21 (revised estimates) is projected to be 9.5% of the GDP
  • Also, according to WHO, 17.33% of the  Indian household’s expenditure on health was greater than 10% of their total expenditure or income. The percentage was higher in rural areas compared to urban areas.
  • According to the Economic Survey (2019-20), Government should increase public spending from 1% to 2.5-3% of GDP on health. It is envisaged in the National Health Policy of 2017. This much spending can decrease out-of-pocket expenditure from 65% to 30% of overall healthcare expenses.
  • However, sustained health financing in India remains a challenge. Along with this, India is shouldered with the responsibility of mitigating  climate change and preservation of the environment.
  • In this context, an eco-tax (Environment tax) will help India to (i) Mobilise resources (ii) Reduce out of Pocket Expenditure on health by increasing public spending (iii) Mitigate climate change.

Benefits of implementing Eco Tax in India

The implementation of an environmental tax in India will have three broad benefits: fiscal, environmental and poverty reduction.

  • First, revenues mobilised from Eco tax can be used for the provision of environmental public goods and addressing environmental health issues. Such as
    • To, finance basic public services.
    • To, reduce other distorting taxes such as fiscal dividend
    • Lastly, to finance research and the development of new technologies
  • Second, it will help in eliminating existing subsidies and taxes that have a harmful impact on the environment.
  • Third, it will help in restructuring existing taxes in an environmentally supportive manner.
  • Fourth, may help in initiating new environmental taxes in the future.

How Eco tax can be implemented?

In India, eco taxes can target three main areas:

  1. One, differential taxation on vehicles in the transport sector for fuel efficiency and GPS-based congestion charges.
  2. Two, in the energy sector by taxing fuels which require for energy generation.
  3. Three, waste generation and use of natural resources.

What are the Challenges in implementing Eco tax?

  • Environmental regulations may have significant costs on the private sector. Such as slow productivity growth, high cost of compliance, resulting in the possible increase in the prices of goods and services.
  • However, the European experience shows that most of the taxes also generate substantial revenue.
  • Further, most countries’ experiences suggest only a negligible impact on the GDP that can be neglected.

What is the way forward?

  1. One, the success of an eco-tax in India would depend on its planning and design. It should be credible, transparent and predictable.
  2. Two, the eco tax rate should be equal to the marginal social cost. This cost arises from the negative externalities associated with the production, consumption, or disposal of goods and services.
  3. Three, Green accounting. Need to evaluate  the damage to the environment based on scientific assessments. It includes, adverse impacts on the health of people, climate change, etc.

Public Expenditure on Health Needs to be Reprioritised

Source: The Hindu

Gs2: Issues Relating to Development and Management of Social Sector/Services relating to Health

Synopsis:  Stimulating Economic growth and Mass vaccination are key to overcome the pandemic-induced economic crisis in India. Increasing public expenditure on health can help India recover from the economic crisis.


  • A nominal growth of 14.4% was assumed in the Union Budget. However, because of a prolonged lockdown, India will witness a fall in the nominal GDP numbers assumed in the Budget.
  • A reduction in nominal GDP numbers will lead to a lowering of tax and non-tax revenues. Whereas an increase in the fiscal deficit as compared to the budgeted magnitudes.
  • Hence, the fiscal projections of Centre’s 2021-22 Budget require recalibration. Further, the center needs to reprioritize expenditures.
  • The allocation for the health sector should be increased substantially by reprioritizing expenditures.

Why the allocation for the health sector should be increased?

  • First, need to strengthen the health care infrastructure in the country.
    • The second wave of the Covid19 has exposed India’s serious under-capacity in health infrastructure.
    • Given the possibility of a third COVID-19 wave, there is an urgent need to increase the health and related infrastructure. Such as the number of hospitals and hospital beds, sources of oxygen supplies, and the manufacture of COVID-19 vaccines and drugs.
  • Second, inadequate budgeting for health care.
    • Centre’s 2021-22 Budget for the Department of Health and Family Welfare is ₹7,597 crore less than the 2020-21 budget for Department of Health and Family Welfare.
    • The budget 2021-22 for health care is quite inadequate for an economy challenged by COVID-19 for two successive years.
    • Hence, the allocation for the health sector needs to be increased substantially by reprioritising expenditures.
  • Third, investment in health care will have a multiplier effect on the economy. For example, Construction activities within the health sector will have high multipliers. Will benefit vulnerable groups of the society including migrant labour and the rural and urban unemployed
  • Fourth, Speedy and larger vaccination coverage of the vulnerable population is key to minimise economic damage.

Why Centre government should procure vaccines?

  • One, COVID-19 vaccination is characterised by strong inter-State positive externalities. This makes it primarily the responsibility of the central government.
  • Two, if the center becomes the sole agency for vaccine procurement, the economies of scale and the Centre’s bargaining power would keep the average vaccine price low.
  • Three, some smaller States may find procuring vaccines through a global tender a quite challenging.

The Centre has had allocated ₹35,000 crore for vaccination as an amount to be transferred to the States. Rather than transferring the money to states, the central government should transfer the vaccines by acting as a single procurement agency for India.

WhatsApp Privacy Policy Comes into Effect : Issues and Challenges

Source: click here

Syllabus: GS

Synopsis: Whatsapp’s new privacy policy came into effect from May 15, 2021. Whatsapp suggested users, who do not want to agree with their policy, should discontinue. It also claims that the new privacy policy is relevant to only the business version of the app, which is is not satisfying.


The senior advocates Kapil Sibal and Arvind Datar reached to the Delhi High Court against WhatsApp’s new privacy policy that came into effect from May 15, 2021.

WhatsApp defended its privacy policy in its affidavit to the Delhi High Court. It openly named Google, Microsoft, Zoom, Zomato, Republic World, and Public Companies such as Aarogya Setu, Bhim, Air India. It said that these apps have similar policies, depending on collecting user data.

What are the advantages of WhatsApp over other platforms?

  • WhatsApp proposed that users who did not agree to its terms and conditions could stop using the app. Apps such as Signal and Telegram offer alternate dependable communication services.
  • However, researchers working in rural and alienated sections have pointed out the dependence on WhatsApp. It is because of the design of the app and facilities.
  • WhatsApp has an advantage with its messaging and audio-video calling even in low-bandwidth Internet areas. It also offers WhatsApp Pay which allows users to transfer money.

What are the issues with WhatsApp’s stand?

The Competition Commission of India observed that WatsApp is abusing its dominant position. It seems relevant here due to the following reasons.

  • Firstly, the claim that the new privacy policy is only for the business version of the app is not satisfying. Metadata, from the non-business versions, is already being exchanged with other services of Facebook.
  • Secondly, people using WhatsApp for businesses will expect the services to be more secure than the normal version. Thus, there will be less privacy due to security-related features.
    • Now, less privacy increases the possibility that the exchange of important documents or ideas on the platform will be prone to be leaked. It can be either company or a third party.
    • It is also more likely because due to increasing competition, big companies either acquire or copy the innovative processes.
    • For example, the lessons learned from the United States v. Microsoft Corporation antitrust case from early 2000 would appear relevant in this context.
  • Third, issue of a potential violation of the privacy of children through Ed-Tech apps. It is due to the lack of complete ethics policy and a data privacy law like the European General Data Protection Regulation (GDPR).
  • Lastly, the Personal Data Protection Bill of 2019 does not even attempt to provide a little protection to users for availing above-mentioned services.

The way forward

  • The data protection Bill needs to be reformulated to make sure that it focuses on user rights with an emphasis on user privacy.
  • A privacy commission should be established to enforce these rights. The government should respect the privacy of the citizens and strengthen the right to information. There is a central need for a strong data protection Bill.

Factly :-News Articles For UPSC Prelims | 24 May, 2021

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