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Factly :-News Articles For UPSC Prelims | Jan 27,2021

What are off-budget borrowings?

Off Budget Borrowings:

  • These are loans that are taken not by the Centre directly and are not calculated under the budget.  These loans are taken by PSUs or other public institutions on the directions of the central government. Such borrowings are used to fulfill the expenditure needs of these institutions.
  • Are these borrowings included in the fiscal deficit? The liability to repay these loans is not formally on the Centre. Thus, they are not included in the national fiscal deficit. This helps keep the country’s fiscal deficit within acceptable limits.
  • CAG Report: In 2019, Comptroller and Auditor General report has pointed out that this route of financing puts major sources of funds outside the control of Parliament.
  • How are off-budget borrowings raised? The government can ask a PSU to raise the required funds from the market through loans or by issuing bonds.
    • Example: In the Budget 2020-21, the government paid only half the amount budgeted for the food subsidy bill to the Food Corporation of India. The shortfall was met through a loan from the National Small Savings Fund. This allowed the Centre to halve its food subsidy bill.
  • What will be the fiscal deficit if we include off-budget borrowings? Due to various sources of off-budget borrowing, the true fiscal deficit is difficult to calculate. However, in July 2019, the CAG had pegged the actual fiscal deficit for 2017-18 at 5.85% of GDP instead of the government version of 3.46%.

Source: Indian Express

COVID deepened inequality in India: Oxfam Report

Why in News?

Oxfam has released a report titled “Inequality Virus Report”. The report has highlighted the increasing inequalities in India.

Facts:

  • About the report: It is a part of its international report released on the opening day of the World Economic Forum’s ‘Davos Dialogues.’
  • The report states that COVID-19 has the potential to increase economic inequality in almost every country at once.

Key Takeaways:

  • Impact of the Pandemic: The wealth of Indian billionaires increased by 35% during the lockdown and by 90% since 2009 to USD 422.9 billion. It ranks  India sixth in the world after the USA, China, Germany, Russia, and France.
    • The Income rise of the top 100 billionaires since the lockdown in March is enough to give a cheque of ₹94,045 to each of 138 million poorest Indian people.
    • The wealth earned by top 11 billionaires during the pandemic, can sustain the MGNREGS or the Health Ministry for the next 10 years.
  • Informal Sector: Out of the total 12.2 crore people who lost their jobs in India, 75% of jobs were lost in the informal sector.
  • Education: As Education shifted online, the digital divide worsened inequalities in India. Only 4% of rural households had a computer and less than 15% of rural households had an internet connection.
  • Sanitation: Out of the poorest 20%, only 6% have access to non-shared sources of improved sanitation. It is 93.4% among the top 20%. It added that 59.6% of India’s population lives in a room or less.
  • Women: The unemployment for women rose by 15% from a pre-lockdown level. This increase in unemployment of women can result in a loss to India’s Gross Domestic Product (GDP) of about 8% or USD 218 billion.

Suggestions:

  • Wealth Tax: It recommends re-introducing wealth tax and a one-time COVID-19 cess of 4% on taxable income of over ₹10 lakh. It will help the economy to recover from the lockdown. According to its estimate, a wealth tax on the nation’s 954 richest families could raise the equivalent of 1% of India’s GDP.
  • Concrete Actions: The government of India should take specific and concrete actions that will build a better future, more equal, and just a future for everyone.

Source: The Hindu

India, China soldiers clash at Naku La Pass in Sikkim

Why in News?
Indian and Chinese Soldiers have clashed at the Balwan area in Naku La Pass in Sikkim.

Naku La Pass:

  • Naku La sector is a pass at a height of more than 5,000 meters above Mean Sea Level(MSL) in the state of Sikkim.
  • It is located ahead of Muguthang or Cho Lhamu (source of River Teesta).
  • The other passes located in the state of Sikkim are Nathu La Pass and Jelep La Pass.
  • While Nathu La pass is located on the east side of Sikkim, Naku La pass is located on the northern border of Sikkim.

Source: The Hindu 

Law Commission of India as a statutory body

Why in News?
The Supreme Court has issued notice to the Centre on a PIL. It is to declare the Law Commission of India as a “statutory body”. And also, to appoint a chairperson and members for the body within a month.

About Law Commission of India

  • Status: It is a non-statutory body. The government of India constitutes it, from time to time.
  • The commission is established for a fixed tenure.  It works as an advisory body to the Ministry of Law and Justice.
  • Functions:
    • It identifies obsolete laws. The laws which are no longer relevant, not in harmony with the existing climate and laws which require change.
    • It suggests suitable measures for quick redressal of citizens’ grievances in the field of law.
    • It enables poors, to take benefit out of the legal process.
    • Likewise, it examines the laws for promoting gender equality.
  • However, The recommendations of the commission are not binding on the government. They are recommendations only. The government or concerned department may accept or reject these recommendations.

Establishment of Law Commission

  • The first Law Commission was established during the British Raj era in 1834. It was established by the Charter Act of 1833 and was chaired by Lord Macaulay.
  • In 1955, the first Law Commission of independent India was established for a three-year term. Since then, twenty-one more Commissions have been established.
  • In 2015, The 21st Law Commission of India was established. Its tenure was up to 31st August 2018. In 2020, the Union Cabinet approved the creation of the 22nd Law Commission.

Source: Indian Express

What is disinvestment?

Disinvestment

  • It means sale or liquidation of the public assets by the government. These are usually Central and state public sector enterprises, projects or other fixed assets.
  • The government can sell its shares, where it is the majority shareholder (Owns more than 51% of shares). For example, Air India, Bharat Petroleum, Delhi Metro Rail Corporation, etc.
  • The government can either reduce its share by selling a part of the company or can transfer its ownership to the highest bidder.

Main objectives of Disinvestment in India:

    • Reducing the fiscal burden on the exchequer
    • Improving public finances
    • To improve the overall efficiency of PSUs
    • Funding growth and development programmes
    • Maintaining and promoting competition in the market
  • Nodal Department: Department of Investment and Public Asset Management(DIPAM) under the Ministry of Finance, handles the disinvestment-related works for the government.

Are Disinvestments targets met by the government?

  • Except in a few years, the government fails to reach the disinvestment target each year.
  • In the current year of 2020-21, less than 3% of the targeted revenue is generated through disinvestment as of November 2020.

Source: Indian Express

Wildlife Crime Control Bureau(WCCB)

Why in News?

Wildlife Crime Control Bureau(WCCB) and Barasat Forest Range have rescued a live pangolin in Kolkata.

Facts:

 Wildlife Crime Control Bureau (WCCB)

  • It is a statutory multi-disciplinary body.  It functions under the Ministry of Environment and Forests. Its responsibilities include combating organized wildlife crime in the country.
  • Headquarters: New Delhi
  • Functions: Under Section 38 (Z) of the Wild Life (Protection) Act, 1972, it is mandated to:
    • Collect intelligence related to organized wildlife crime activities. And to circulate it to the States and other enforcement agencies for immediate actions, to catch the criminals.
    • Establish a centralized wildlife crime data bank.
    • Coordinates with foreign authorities and international organization to facilitate universal action on wildlife crimes.
    • Build capacity of the wildlife crime enforcement agencies for scientific and professional investigation into wildlife crimes.
    • Assist State Governments to ensure success in prosecutions related to wildlife crimes.
    • Advise the Government of India on issues relating to wildlife crimes having national and international ramifications, relevant policy, and laws.
  • It also assists and advises the Customs authorities in inspection of the consignments of flora & fauna as per the provisions of Wild Life Protection Act, CITES, and EXIM Policy governing such an item.

Source: The Hindu

Cairn threatens Indian asset seizures abroad in tax case

Why in News?
Cairn Energy has asked the Government of India to resolve the retrospective taxation case. It has threatened to begin attaching Indian assets including bank accounts in different world capitals in case of non-resolution.

Background:

  • The Permanent Court of Arbitration ruled in Dec. 2020 that the Indian government was wrong in imposing a retrospective tax on Cairn. It also asked the Indian government to pay for the damages to Cairn.
  • Finance Ministry had said the government would study the verdict. It will take any action only after that.

Further Reading on Cairns Issue

What has Cairns said now?

  • Now, Cairns has said that in case of inaction by India, it may take an extreme step such as attaching Indian assets including bank accounts in different world capitals.
  • It has also cited clauses in the U.K.-India Bilateral Investment Treaty and the New York Convention to which India is a signatory.

Retrospective Taxation:

  • It allows a country to pass a rule on taxing certain products, items, or services. This taxation is applied to the companies from a previous date i.e. before the date on which the law is passed.
  • Countries correct anomalies in their taxation policies in the past by this step.
  • Many other countries like the USA, the UK, the Netherlands, Canada, Belgium, Australia, and Italy have retrospectively taxed companies.

New York Convention:

  • United Nations diplomatic conference adopted this convention in 1958 and entered into force in 1959.
  • The Convention’s principal aim is that foreign and non-domestic arbitral awards will not be discriminated against. It obliges Parties to ensure such awards are recognized and generally capable of enforcement in their jurisdiction in the same way as domestic awards.

Source: The Hindu

Green tax on vehicles older than 15 years

Why in News?

The Union Minister for Road Transport and Highways has approved a proposal to levy a ‘green tax’ on old vehicles. The policy will come into effect on April 1, 2022.

 What is Green Tax?

  • Green tax is also called pollution tax or environmental tax. It is the tax levied on goods that cause environmental pollution.
  • Purpose of Green Tax: The tax will discourage people from using vehicles that damage the environment. It will motivate them to switch to newer, less polluting vehicles and reduce the overall pollution level and make the polluter pay for it.

Government Green Tax Proposal:

How will the vehicles be taxed? The Green tax will be applied to the vehicles in the following categories:

  • Transport vehicles older than 8 years to be charged at the time of renewal of fitness certificate at the rate of 10-25% of road tax.
  • Personal vehicles to be charged Green Tax at the time of renewal of Registration Certification after 15 years.
  • Public transport vehicles such as city buses to be charged lower tax.
  • Higher Green Tax of up to 50% of road tax for vehicles being registered in highly polluted cities like Delhi-NCR.
  • Differential tax depending on fuel (petrol/diesel) and type of vehicle.

Exemptions: The following vehicles will be exempted from the Green Tax proposal:

  • Strong hybrids, EVs, and vehicles that run on alternative fuels such as CNG, LPG, and ethanol.
  • Vehicles used in farming such as tractors, harvesters, and tillers.

How will the Green Tax be used?

  • Revenue collected from the green tax will be kept in a separate account. The amount will be used for tackling the problem of pollution.
  • The tax will also be used by states to set up state-of-art facilities to monitor the emission.

Source: Business Today

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