9 PM Daily Brief – August 11th,2020

Good evening dear reader.

Here is our 9pm current affairs brief for you today

9 PM for Main examination

GS-2

1. Rising China – Options for India
2. The WHO’s relevance is fading

GS-3

3. Making up for shortfalls in GST collection
4. India’s taxation policy is more business-friendly than pro-poor
5. Draft EIA notification dilutes environmental protections

GS-4

6. Civil services examination – Steel frame of India

9 PM for Preliminary examination

FACTLy

1.Rising China – Options for India

Source- The Hindu

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

Context – At a time when the struggle for supremacy between Washington and Beijing is intensifying, numerous countries are finding themselves in an awkward position to take sides.

Global backlash against China-

1. New cold war– The relationship between US and China are at their lowest point in decades where both countries are engaged in confrontation on multiple fronts including ongoing trade-war.
2. Economic embargo– United Kingdom took decision to end reliance on Chinese imports and call off its Huawei 5G projects.

Asian Countries in conflict with China-

1. Hong-Kong – Beijing has disturbed its ties with Hong Kong, paying scant regard to the concept of ‘one country two systems’.
2. Vietnam –In the 1970s, China grabbed control over the Paracel Islands from Vietnam.
3. Philippines- In the 1990s, it occupied Mischief Reef in the Spratly Islands, an area of the South China Sea that the Philippines had always considered its territory.

Countries cooperating with China – Despite the aggressive approach of China, few countries are still willing to cooperate with China due to strong economic ties that have been forged over the years. Instances of such are as following:

1. Australia made it clear that it would not do anything contrary to its interests and a strong economic engagement was an essential link in the Australia-China relationship.
2. K. also stated that it wants a positive relationship and would work with China.
3. China becoming a threat to the majority countries of Association of Southeast Asian Nations (ASEAN), still they opt for not to take sides as China is one of the biggest trading partners with ASEAN.

The Strain in Relations between India and neighborhood-

1. India- Pakistan –Pakistan PM Imran Khan recently introduced a new political map, laying untenable claims to territories in the Indian state of Gujarat and Union Territories of Jammu and Kashmir and of Ladakh.
2. India- Nepal– India inaugurated the Darchula-Lipulekh pass link road recently, cutting across the disputed Kalapani area, which raised tension and Nepal has gone to the extent of publishing new maps which show the ‘Kalapani area’ as a part of Nepal.
3. India- Sri Lanka– With the Rajapaksas back in office after the recent election held in Sri Lanka, this could be worrying sign for India as Rajapaksas seen to be close to China.
4. India- Bangladesh – There is a constant strain in India-Bangladesh relations after the introduction of Indian Citizenship Amendment Act [CAA].

Growing Chinese power in Asia-

1. New economic corridors –China has proposed taking forward an economic corridor plan with Nepal, styled as the Trans-Himalayan Multi-Dimensional Connectivity Network, and expanding the China-Pakistan Economic Corridor (CPEC) to Afghanistan, touting benefits of new economic corridors on the lines of the CPEC.
2. China-India Competition – China- Iran has made a deal which provides for China building expanding Iranian Railways and gives China access to Iranian oil for the next 25 years. Whereas India lost its terminal projects in Chabhar port due to delay in funding and implementation.

Way Forward-

As India- China are destined to remain neighbors, it is imperative for the India to form long term strategies in the form of bilateral ties or by using socio-political relation to restore the friendly relations and to avoid any future conflict.

2.The WHO’s relevance is fading

Source: The Hindu

Syllabus: GS-2- International Organizations

Context:  The WHO’s role amidst the Covid-19 pandemic has been criticised.

World Health Organization

• It is a specialized agency of the United Nations that is concerned with international public health.
• It was established on 7th April 1948, and headquartered in Geneva, Switzerland.
• The WHO is a member of the United Nations Development Group. It has 194 member states.

Criticisms of WHO

1. Slow Response: The WHO was expected to play the dual role of a think tank and oversee global responses to public health emergencies. However, WHO unnoticed the emergence of Covid-19 even when the first cases in China were supposedly reported in November 2019.
2. Delay in the declaration: WHO delayed in declaring COVID’19 as a ‘public health emergency of international concern’ (PHEIC) and also as Pandemic, especially when the COVID 19 was exhibiting the characteristics of a pandemic, i.e. spreading rapidly around the world.
3. Mere Coordinating Body:The WHO has been reduced to a coordinating body, beholden to the interests of rich member states.
4. Poor Functional Efficiency: The functional efficiency of WHO has reduced due to  organisational lethargy, absence of decisive leadership, bureaucratic indolence, underfunded programmes, and inability to evolve to meet the needs of the 21st century.
5. Poor leadership:Director General Tedros Adhanom has been criticised for his leadership abilities during this pandemic. There have been allegations on current Director General that he has been generous in his approach towards China.
6. Donor Driven Agenda: WHO is funded through assessed contributions made by the member states and voluntary contributions from member states and private donors. The assessed contributions can be spent as per the organisation’s priorities approved at the World Health Assembly, while voluntary contributions are allocated in consultation with the donors. This has led to lack of financial autonomy and a donor-driven agenda.

Conclusion: The WHO has failed to handle the pandemic. However, governments across the globe are equally responsible for their poor handling and response to the Covid-19 pandemic.

3.Making up for shortfalls in GST collection

Source: The Hindu

Syllabus: GS3: Mobilization of Resources, Growth, Development and Employment.

Context:  With slowing down of the economy and fall in growth rate, the centre is facing difficulty to mobilise resource for the GST compensation assured for states.

Evolution of compensation mechanism to states

• GST is a destination-based tax and it subsumed several taxes, including those of the States such as sales tax.
• Since it subsumed some taxes of states and negatively affected the taxes of manufacturing states many states were against the introduction of GST.
• To solve the issues of shortfall in revenue and to convince manufacturing States to agree to GST, a compensation formula was created.
• The Constitution Amendment Bill, introduced in 2014 had two provisions, First, it provided for a 1% tax on inter-State tradewhich would be assigned to the supplying State. Second, it made provisions for a law to be passed by Parliament to provide compensation to States for loss of revenue for a period up to five years.
• However, the Select Committee of the Rajya Sabha recommended guaranteed compensation to states for a period of 5 years subsequently the1% tax on inter-State trade was dropped as tax receipts of manufacturing States had been protected by the guarantee.

Compensation mechanism adopted in GST

• With all taxes subsumed by the GST, the GST (Compensation to States) Act, 2017 assumed that the GST revenue of each State would grow at 14% every year as compared to year 2015-16.
• Compensation will be provided for states if State collect tax less than this amount in any year and the compensation will be paid every two months based on provisional accounts.
• The compensation scheme will be valid for 5years (2017-2022).
• To mobilise resources to compensate for states shortfall in tax collection a compensation cess fund was created. The proceeds from additional cess imposed on items such as pan masala, cigarettes and tobacco products, aerated water, caffeinated beverages, coal and certain passenger motor vehicles will be channelised to the cess fund.

 Analysis:

• The cess collected in the first two years exceeded the shortfall of States but during the 3^rdyear owing to slowdown in tax collections, economic slowdown and negative growth in sectors such as motor vehicles the cess collected fell significantly short of the requirement.
• Considering this year, while most economist predict negative real GDP growth and reduced tax buoyancy along with the effect of pandemic on economy 14% tax growth rate looks ambitious.

What can be done?

• With assumed rate of growth of a State’s GST revenue is set at 14% by Parliament through the 2017 Act the Central government is constitutionally bound to compensate States for loss of revenue for five years.
• Amendment to the GST (Compensation to States) Act, 2017to reduce the period of guarantee to three years. But this would be nearly impossible as states will be reluctant to this idea.
• Centre can fund this shortfall using its own revenue but shortfall in its own tax collection along with the burden of extra expenditure to manage the health and economic crisis centre may not be in a position to support states
• The Centre can borrow on behalf of the cess fund. Also, the tenure of the cess can be extended beyond five years until the cess collected is sufficient to pay off this debt and interest on it.
• The centre can negotiate with the states through GST Council and convince them that 14% growth target is unrealistic. With the consensus of states, they can work to reset the assured tax level.

Conclusion: The GST Council, which is a constitutional body should find a practical solution that would balance the interest of states as well as the centre.

4.India’s taxation policy is more business-friendly than pro-poor

Source: Indian Express

Syllabus: Gs3: Mobilization of Resources, Growth, Development

Context: The taxation policy of the Indian government has remained pro-rich (and anti-poor) and it has deprived the state of important fiscal resources.

Pro rich and Anti poor taxation policies

• Wealth tax was abolished in 2016 and it was replaced by a 2 per cent surcharge on super-rich individual.
• Corporate taxes were slashed from 30 per cent to 22 per cent to attract foreign investors and encourage companies to invest.
• Parallelly government has relied on hiking cesses and surcharges to mobilise resources. The share of indirect taxes has increased by up to 50 per cent of the gross tax revenue in FY2019.
• Similarly,there has been a steady increase in customs or excise duty on commonly used goods such as petroleum products, metals, sugar, automobiles and consumer durables.
• Even, the service tax has been hiked steadily to 18 per cent under GST, from 12.4 per cent.
• Another case point is, the imposition of fresh cesses such as the Swachh Bharat cess and Krishi Kalyan cess in addition to GST.

Impact

• Increase in Indirect taxes often penalise the poor and the middle class more than the rich.
• Cuts in corporate tax have resulted in a revenue loss of Rs 1.5 lakh crore that have contributed to making the state poor.
• With decrease in direct tax collections and inadequacy of indirect taxes to make up for the loss in direct taxes fiscal deficit has increased to more than 4.5 per cent of GDP in 2019-20.
• As a consequence,the capital expenditure decreased this points to the reason why public spending on education and health has stagnated.
• During COVID, statesFaced with increased expenditures and less resources to tackle health emergency they were forced to open liquor shops to earn tax revenues from alcohol at the cost of social wellbeing.
• Also, the pro-business policy has forced the centre to rely heavily on indirect tax-based revenues as evident from centre’s decision to increase the duty on fuel by a record Rs 10 per litre on petrol when global crude prices have been falling
• India’s tax-GDP ratio has remained low (10.9 per cent in 2019) as against the OECD average of 34 per cent.

Way Forward:

• With increase in number of super rich in India and their profits amounting to 26 per cent of the country’s GDP as per IIFL Wealth Hurun India Rich List a tax rate of 4 per cent on them will get the much-needed finance that could be used for cash transfers and a fiscal stimulus
• Successful examples from Europe, points out that high tax rates on the wealthy have played a key role in ensuring a strong social security net for the poor.
• A wealth tax, a COVID-19 cess on the super-rich and a surcharge on the super-rich for their income from listed equity shareswill help in mitigating the current situation along with reducing both income and social inequalities.

Conclusion: Deferring tax payments, penalties on filling extensions and slashing corporate taxes is not the appropriate approach towards reviving the economy. India needs to reform its tax system to move towards inclusive growth and sustainable development rather than targeting only investment-led economic growth.

5.Draft EIA notification dilutes environmental protections

Source: The Indian Express

Syllabus: GS-3- Environment- Environmental Impact Assessement

Context: The draft Environmental impact assessment (EIA) notification 2020 has been criticised.

Environmental Impact Assessment (EIA)

• EIA is a process which studies all aspects of the environment and seeks to anticipate the impact (positive and/or negative) of a proposed project or development on the environment.
• EIA is mandatory under the Environmental (Protection) Act, 1986 for 29 categories of developmental activities involving investments of Rs. 50 crores and above.

Draft EIA Notification 2020

• It allows for post facto approval for projects. It has provisions to award clearances for projects even if they have started construction or have been running without securing environmental clearances.
• It has omitted prior screening requirements for Category B projects and expanded the list of projects categorised under B2
• It proposes to classify inland waterways as Category B2 projects and will not require public consultations irrespective of whether these projects are located in notified ecologically sensitive areas.
• It proposes to expand the list of projects that do not require public consultation before receiving Prior-EC. It confers absolute power to the central government to categorise projects as “strategic” and information related to these projects will not be put in public domain.
• New construction projects up to 1,50,000 square metres (instead of the existing 20,000 square metres) will not require detailed scrutiny by the Expert Committee, EIA studies and public consultation.
• It proposes an eased monitoring mechanism Under the draft, project owners are to submit environmental compliance reports (after getting clearance) every year in contrast to present 6 months.

Issues with Draft EIA 2020

1. The draft notification is legally untenable as it does not conform to the Environment (Protection) Act 1986. The Act requires the Centre to take measures to protect and improve the environment. However, the draft EIA 2020, reduces the ambit and stringency of the scrutiny of impact assessment and thus is detrimental to the environment.
2. As the draft allows for post facto approval for projects, it is in violation of the “precautionary principle”-a principle of environmental sustainability. Further, any environmental damage caused by the project is likely to be waived off by only as the violations get legitimised.
3. There is no mention of climate change and related consideration. As India is a highly vulnerable to climate change impacts, the government should ensure that regulatory approvals do not regions in India more vulnerable or impact the adaptive capabilities of communities.
4. The Draft EIA completely dilutes public consultation process and there is a risk of states taking up development initiatives at the cost of environmental degradation
5. The draft notification reduces the time for appraisal from 60 days under the 2006 notification to 45 days. It also curtails the discretion of the expert appraisal committees by disallowing them from seeking fresh studies.

Conclusion: Dilution of EIA to boost economic growth is a flawed idea and it’s high time for the government to address the increasing socio-economic and environmental challenges.

6.Civil services examination – Steel frame of India

Source: The Hindu

Syllabus: GS 4 – Aptitude and foundational values for Civil Service, integrity, impartiality and non-partisanship, objectivity, dedication to public service, empathy, tolerance and compassion towards the weaker-sections

Context: Evaluating civil service recruits for their intelligence and integrity, for raising credible and well-performing civil servants.

Civil Service Examination: A nationwide competitive examination in India conducted by the Union Public Service Commission (UPSC) for recruitment to various civil services of the Government of India including the Indian Administrative Service, Indian Foreign Service and Indian Police Service.

UPSC’ Performance as a selection authority:

1. The UPSC has a strenuous protocol.
2. The process is clinical and as objectiveas possible. It is also well known for its intense and spectacular features.
3. It is an honest organization which allows no unethical practices in the various stages of the selection process.
4. Reflects social diversityas candidates from all sections such as other backward Castes, Scheduled Tribes and castes as well as women are being selected in the services.

Selection process in 1960s and at present:

1. Number of candidates: In 1960s, the number of candidates was about 15,000 to 20,000. However, at present the number of appearing candidates was around 8 lakh for same number of vacancies as of 1960’s.
2. Stages of Examination: In 1960’s, No preliminary examination was conducted. However, at present the preliminary examination eliminates a majority of applicants.

 Challenges towards transforming the image of the Civil Services:

1. High burden on administrators:There are 739 districts in India but the number of District Collector and the District Superintendent of Police are much less. Thus, the sheer workload prevents them from finding time to interact with every citizen.
2. Availability to the common man: Asthe area of jurisdiction and the number of population of different districts vary each other it is hard to make officials more easily available to the common man in distress, who looks up to the officialdom for assistance almost on a daily basis.
3. Lack of selfless leaders: There are a few young officers who are different from the majority and put their heart and soul into the task of alleviating the miseries of the poor.
4. Instances of corruption: There are officials of the bureaucracy who demand illegal gratification to provide a service which is the fundamental right of every citizen.
5. Biased behavior of the Police officials:As there are more than 15,000 of police stations in India, Majority of them have blemished record of ill-treating the poor. They do not have readiness to serve the not-so literate and the poor.

Way Forward: It is very important that the large core of enlightened senior officers need to mould the character of the new entrants. Further, wherever new officers see injustice or violence against unsuspecting citizens, it will be for them to rise in protest.

9 PM for Preliminary examination

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